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N ATIONAL TREASURY MANAGEMENT AGENCY IRELANDREPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001
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Michael J. Somers Chief Executive
John C. Corrigan
Anne Counihan
Adrian J. Kearns
Jim Farrell
National Debt of I re land
The National Treasury Management Agency Act 1990 provided for the establishment of the National
Treasury Management Agency "to borrow moneys for the Exchequer and to manage the National Debt on
behalf of and subject to the control and general superintendence of the Minister for Finance and to
perform certain related functions and to provide for connected matters".
The 1990 Act enabled the Government to delegate the borrowing and debt management functions of the
Minister for Finance to the NTMA, such functions to be performed subject to such directions or guidelines
as he might give. Obligations or liabilities undertaken by the NTMA in the performance of its functions
have the same force and effect as if undertaken by the Minister. The NTMA came into existence on
3 December 1990.
The Chief Executive, who is appointed by the Minister for Finance, is directly responsible to him and is
the Accounting Officer for the purposes of the Dáil Public Accounts Committee. The NTMA has an Advisory
Committee to assist and advise on such matters as are referred to it by the NTMA.
Substantial additional functions were given to the NTMA in the National Pensions Reserve Fund Act 2000
and the National Treasury Management Agency (Amendment) Act 2000. The Dormant Accounts Act 2001
also conferred additional responsibilities on the NTMA.
The Asset Covered Securities Act 2001 confers certain functions on the NTMA in the event of issuer default.
L E GA L F R A M E WO R K
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28 June, 2002
Mr Charlie McCreevy, T.D.,Minister for Finance,Government Buildings,Upper Merrion Street,Dublin 2
Dear Minister,
I have the honour to submit to you the Report and Accounts of the National Treasury
Management Agency for the year ended 31 December 2001.
Yours sincerely,
Michael J. SomersChief Executive
National Treasury Management Agency
Treasury Building, Grand Canal Street, Dublin 2, Ireland. Telephone: (353 1) 664 0800 Fax: (353 1) 664 0890 e-mail: [email protected] Swift: NTMAIE2D
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TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
NATIONAL TREASURY MANAGEMENT AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SUMMARY OF ACTIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FUNDING & DEBT MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
DEBT SERVICE COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DEBT MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
NATIONAL SAVINGS SCHEMES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
CREDIT RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
RISK AND FINANCIAL MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
INFORMATION TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
LEGAL AND CORPORATE AFFAIRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ULYSSES SECURITISATION P.L.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
NATIONAL PENSIONS RESERVE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SOCIAL INSURANCE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
CENTRAL TREASURY SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
STATE CLAIMS AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
DORMANT ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
THE ASSET COVERED SECURITIES ACT 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
CONSULTANCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Table of Contents
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INTRODUCTION
2001 - A YEAR OF CHANGEThe year 2001 brought with it the major challenge of absorbing in a practical way the growth and
diversification in the NTMA’s functions – as manager for the National Pensions Reserve Fund, as the State
Claims Agency, as provider of the Central Treasury Service and as the manager of the Social Insurance
Fund – prescribed in two Acts of the Oireachtas in 2000. Already in 2002, a further significant function
is to be added, subject to final Government and then Oireachtas approval, namely the management of
the proposed National Development Finance Agency. We welcome these new and proposed responsibilities
and will ensure that they are discharged to the highest possible standards.
Although the new functions all relate to financial – both asset and liability – management, a wide range
of expertise, from investment to claims management, had to be recruited, organised and given strategic
focus through 2001. It would have been a challenge to establish and develop even one new business
while maintaining the core activity of issuing and managing the National Debt. Doing so in the case of
a spread of functions at once so diversified, so significantly-sized and far-reaching, proved an exciting
and demanding task.
Introduct ion
THE ADVISORY COMMITTEE: (back row from left to right) Donald C. Roth, Gerold W. Brandt, Tom Considine, Paul Carty, (front row from left to right) Joe Moran, John F. Daly, Lewis L. Glucksman.
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CHIEF EXECUTIVE
Michael J. Somers
DIRECTORS
John C. Corrigan National Pensions Reserve Fund
Anne Counihan Legal & Corporate Affairs
Jim Farrell Funding & Debt Management, Information Technology
Adrian J. Kearns State Claims Agency, Risk & Financial Management
ADVISORY COMMITTEE
Joe Moran (Chairman)* Director, Celtic Utility
Gerold W. Brandt Former member of the Managing Board, Bayerische Landesbank, Munich
Paul Carty Financial Consultant
John F. Daly Chairman, High Skills Pool Limited
Lewis L. Glucksman Private Investor
John Hurley Secretary General, Department of Finance
Donald C. Roth Managing Partner, Emerging Markets Partnership, Washington D.C.
The Advisory Committee met formally on five occasions in 2001. Other meetings with members of the
Committee took place on a regular basis.
The NTMA thanks the Committee members for their advice and assistance during the year and for their
commitment of time and effort.
In particular, the NTMA would also like to thank John Hurley for his contribution to the NTMA during his
term of office.
* In March 2002 John F. Daly took over the chairmanship from Joe Moran who remains as a member of theCommittee. Tom Considine, Secretary General, Department of Finance replaced John Hurley from March 2002.
STAFF
The Chief Executive and Directors wish to acknowledge the effort and commitment of all staff members
during the past year – a year of major change and progress for the NTMA.
National Treasury Management Agency
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SUMMARY OF ACTIVITY
The key features of 2001 were:
Debt and Debt Service
� Ireland continued to have the second lowest Debt/GDP ratio of the 15 EU Member States.
� The General Government Debt (GG Debt)/GDP ratio fell from 39 per cent at end 2000 to an estimated
37 per cent at end 2001 primarily as a result of the relatively strong economic growth, while the
National Debt/GNP ratio fell from 42 per cent to an estimated 38 per cent over the same period.
� The GG Debt/GDP ratio is expected to fall by a further three percentage points by end 2002 and, in line
with current budget figures, is expected to remain at around 34 per cent over the period 2003 - 2004.
� Total debt service expenditure was some e300 million below budget. This amount has been carried
forward in the Capital Services Redemption Account (CSRA) and is available for use by the
Government in 2002 and future years.
� Interest payments on the Debt as a percentage of tax revenue continued to fall; they stood at 6.7
per cent in 2001, which is only a quarter of what they were 10 years ago.
� Savings of e18.3 million were achieved against an externally audited benchmark.
� Preparations were made to facilitate substantial sales of bonds in 2002 to refinance maturing debt;
these included the creation of two new benchmark bonds and their listing on the EuroMTS electronic
trading system.
Credit Rating
� Standard & Poor’s upgraded Ireland to the top AAA credit rating. Ireland also has AAA ratings from
Moody's and Fitch, as well as from Rating and Investment Information Inc., Japan.
Central Treasury Service
� From 31 January 2001 the NTMA may provide deposit and loan facilities to Local Authorities, Health
Boards and Vocational Education Committees.
� Loan facilities (including short-term advances) amounting to some e100 million were committed
by year end and since then a further e50 million has been committed.
Summary of Act iv ity
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National Pensions Reserve Fund
� In April 2001 the NTMA was appointed, under the National Pensions Reserve Fund Act 2000, as
Manager of the Fund. At end 2001 the Fund stood at e7.7 billion (including accrued interest) and
was entirely in cash deposits.
� By end 2001 the Fund had earned e229 million in interest since its inception on 6 April 2001. Prior
to that date, the moneys were managed by the NTMA in the Temporary Holding Fund for
Superannuation Liabilities and earned e358 million in interest.
State Claims Management
� Under the National Treasury Management Agency (Amendment) Act 2000, the management of certain
personal injury and property damage claims against the State was delegated by the Government on
3 December 2001 to the NTMA, which, for this purpose, is known as the State Claims Agency (SCA).
� Approximately 700 existing claims have been transferred to the SCA from Government Departments
and other State authorities. Based on present trends the annual throughput of new claims is
expected to be in excess of 1,000.
Nítrigin Éireann Teoranta
� Pursuant to the Nítrigin Éireann Teoranta Act 2001 the NTMA paid off e241 million of Nítrigin
Éireann Teoranta debt on 16 November 2001.
Summary of Act iv ity
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FUNDING & DEBT MANAGEMENT
During the course of 2001 the NTMA’s sources of funds with respect to its funding and debt management
activities were as follows:
ee million
Bonds denominated in euro 83
Short-term Paper (net) 4,176
4,259
These funds, together with the Exchequer cash surplus of e588 million 1 in respect of 2001, resulted in
total resources of e4,847 million, which were used to repay debt and to provide a temporary loan facility
to the Housing Finance Agency as outlined below:
ee million
Bonds denominated in euro 2,189
National Savings Schemes (net) 186
Other domestic loans 22
Euro legacy & foreign currency debt 2 1,219
Nítrigin Éireann Teoranta debt 241
Housing Finance Agency facility 628
Increase (net) in deposits and other cash balances 362
Total 4,847
Gross cash flows increased by e5 billion to e300 billion compared with the year 2000. These flows
consisted of gross receipts of e151 billion and gross payments of e149 billion.
1 Exchequer cash surplus is the Exchequer surplus (e653 million) less a reduction of e65 million in other balances.
2 Euro legacy debt comprises debt contracted and denominated in the individual currencies of other EMU participant countries, now replaced by the euro.
Funding & Debt Management
The diagram below shows the main sources and applications of funds:
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Funding & Debt Management
Issuance ofeuro
denominatedBonds
83
Issuance ofShort term
Paper
4,176
ExchequerCash
Surplus
588
Repayment of euro
denominatedBonds2,189
Repaymentof otherDomestic
Loans22 Repayment
ofNationalSavings
186
Repayment ofeuro legacycurrency and
foreigncurrency debt
1,219
Increase(net) in
deposits &other
balances362
Advances toHousingFinanceAgency
628
Repaymentof Nítrigin
ÉireannTeoranta
debt241
4,847
Sources and Application of Funds - E Million
Sources
Applications
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THE NATIONAL DEBT
The nominal value of the National Debt as traditionally measured, which is calculated net of cash
balances, was e36.2 billion at end 2001; this is some e328 million below the end 2000 level. The drop
would have been greater but for the requirement to repay the Nítrigin Éireann Teoranta debt of e241
million. The impact of the Exchequer surplus and other factors contributing to the fall in the Debt are
shown below:
CHANGE IN NATIONAL DEBT IN 2001
ee million ee million
National Debt (end 2000) 36,511
Plus
Repayment of Nítrigin Éireann Teoranta debt 241
Reduction in balance on Capital Services Redemption Account 56
Net discounts on Tranching and Cancellations1 15
Exchange Rate Impact 13 325
Less
Exchequer Surplus (-) -653
Change in National Debt -328
National Debt (end 2001) 36,183
1 Premiums/Discounts arise when bonds are issued at other than their par value due to a difference between thecoupon on the debt and market yields.
Funding & Debt Management
13
CURRENCY AND DURATION OF THE DEBT
The NTMA continued its policy of substantially eliminating foreign exchange risk by hedging most non-
euro liabilities. As a result, some 94 per cent of the National Debt at the end of 2001 was denominated
in euro with the balance of 6 per cent in sterling. Since then, taking advantage of the fall in the value
of sterling, that balance has been further reduced.
The duration of the Debt during 2001 fell from 3.9 years at the beginning of the year to 3.4 years by the
end of the year. This reflects the policy of funding by way of short term borrowing to take advantage of
declining interest rates.
THE GENERAL GOVERNMENT DEBT
The General Government Debt (GGD) is the definition of debt used for comparative purposes within the
European Union. The National Debt, as traditionally measured, is the principal component of the GGD.
However, GGD is a gross measure of debt and, therefore, does not include any offset for Exchequer cash
balances; in addition, GGD represents a wider definition of Government, including Local Government,
certain extra-budgetary funds, and the estimated gross interest overhang on the National Savings
Schemes (amounting to some e2,303 million at end 2001 and against which there is a provision of
e1,111 million in the Small Savings Reserve Fund). The GGD does not include intra-Government debt; it
calculates the consolidated gross debt owed by the Government sector as a whole.
The GGD was some e42.1 billion at end 2001. This compares with a figure of e40.3 billion at end 2000,
an increase of some e1.8 billion. While the National Debt declined by some e0.3 billion, there were
counterbalancing adjustments amounting to some e2.1 billion. The main items accounting for the net
increase of e1.8 billion were:
� e775 million belonging to the Social Insurance Fund was switched from Exchequer Notes to bank
deposits and other assets in order to earn a higher rate of interest. The borrowings to replace this
are added to the GGD (although there is no additional burden on the State).
� An increase of some e720 million debt in the Local Government sector in 2001, most of which was
provided by the Housing Finance Agency.
� Debt was incurred to provide a temporary loan facility of some e628 million to the Housing Finance
Agency in 2001 for on-lending to the Local Government sector as above. (The Housing Finance
Agency is classified as outside the General Government sector). This temporary facility has no
impact on the National Debt as it is regarded as a cash asset but it does impact the GGD.
Funding & Debt Management
14
TREND IN THE NATIONAL DEBT AND GENERAL GOVERNMENT DEBT
As a result of the foregoing factors, there have been divergent trends in the National Debt and General
Government Debt as shown in the graph below:
DEBT RATIOS
Funding & Debt Management
Trend in Debt over the last 10 years
50
45
40
35
30
25
20
Ebn
Source: Eurostat and NTMA
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Trend in National Debt & General Government Debt Ratios
100
80
60
40
20
0
82
74 74
Source: Eurostat, Department of Finance & NTMA
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
94 9296
9389 90
83
66 65
55 55 5350
38 3739
42
General Government Debt
National Debt
National Debt/GNP
GGD/GDP
%
The General Government Debt/GDP ratio fell by 2.4 percentage points during the year – from 39 per cent
at end 2000 to an estimated 36.6 per cent at end 2001, reflecting mainly the relatively strong growth
in GDP in 2001. Similarly, the National Debt expressed as a percentage of GNP decreased by 4 percentage
points to an estimated 38 per cent at end 2001 from almost 42 per cent a year earlier.
If the e7.7 billion invested at year end in the National Pensions Reserve Fund were to be included as an
offset to the National Debt, as is the case with Exchequer cash balances, this would have reduced the
National Debt/GNP ratio at end 2001 by an additional 8 percentage points, from 38 per cent to 30 per
cent. Similarly, netting out the Fund from the General Government Debt would have reduced the GGD/GDP
ratio by an additional 7 percentage points, from 37 per cent to 30 per cent.
The Government's three-year Budget Plan announced in December 2001 points to a further modest
improvement in the GGD/GDP ratio for 2002 – from 37 per cent at end 2001 to some 34 per cent by end
2002, and remaining at around 34 per cent to 2004.
INTERNATIONAL COMPARISONS
International comparisons of indebtedness are normally based on the ratio of General Government Debt
to Gross Domestic Product.
At end 2001, Ireland’s comparative indebtedness remained the second lowest among the fifteen EU
Member States at around two thirds of the EU average. This compares with a position well above the
average in the first half of the 1990s.15
Funding & Debt Management
GGDebt/GDP Ratios for EU Member States 2001
120
100
80
60
40
20
0
%
Sources: Eurostat, 2001 estimate for Ireland – Dept. of Finance.
Luxe
mbo
urg
Irel
and
UK
Finl
and
Denm
ark
Neth
erla
nds
Swed
en
Port
ugal
Fran
ce
Spai
n
Germ
any
Aust
ria
Gree
ce
Belg
ium
Ital
y
4452 52 54
57 58 60 62
100107 108
433937
5
16
This favourable position reflects Ireland’s economic performance rather than a material change in the EU
average itself, as can be seen from the graph below:
Funding & Debt Management
Ireland’s Debt/GDP Ratio relative to the EUAverage (excluding Ireland)
180
150
120
90
60
30
0
%
Sources: Eurostat, 2001 estimate for Ireland – Dept. of Finance.
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
162
147137
127
115103
9382
76
63 61
Ireland and EU Average Debt/GDP Ratio
105
90
75
60
45
30
%
Sources: Eurostat, 2001 estimate for Ireland – Dept. of Finance.
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
EU Average (excl. Ireland)
Ireland
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DEBT SERVICE COSTS
The total debt service budget for 2001 was e2,678 million (e2,170 million from the Exchequer and e508
million from the Capital Services Redemption Account (CSRA)). The outturn at e2,379 million was e299
million lower than budget, mainly due to favourable interest and exchange rate movements.
Of the expenditure of e2,379 million, e2,323 million came directly from the Exchequer, e153 million
above the original estimate of e2,170 million. CSRA debt service expenditure was e56 million, some
e452 million lower than the originally estimated expenditure of e508 million. This was in line with the
Budget Statement of the Minister for Finance of 5 December 2001.
ANALYSIS OF EXCHEQUER DEBT SERVICE OUTTURN RELATIVE TO BUDGET
(ee million)
Budget Outturn
Exchequer Debt Service Expenditure 2,170 2,323
Plus: Payment from CSRA 508 56
Underlying Debt Service Expenditure 2,678 2,379
Favourable Variance from Budget 299
Debt service costs of e2,379 million include interest payments of e1,875 million, sinking fund payments
of e478 million, fees of e17 million and administration expenses of e9 million. The interest payments
of e1,875 million include the above mentioned payment of e56 million from the CSRA.
The favourable variance of e299 million on debt service cost is reflected in the balance of e750 million
in the CSRA at end 2001. In his Budget Statement, the Minister for Finance announced that he will use
e500 million and e250 million of this CSRA balance in 2002 and 2003 respectively.
Debt Serv ice Costs
A diagram showing the breakdown of debt service costs is set out below:
Included in the debt service expenditure is e403 million for interest on the National Savings Schemes.
This reflects the estimated interest accruing on these schemes in 2001. The interest actually paid out on
repayments from the schemes in 2001 was e412 million. The additional e9 million (representing the
excess over the accrual) was paid from the Small Savings Reserve Fund.
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Debt Serv ice Costs
ExchequerBudget2,170
Total Actual Cost2,379
Positive Variance from Budget299
Exchequer ExpenditureInterest (net CSRA) 1,819Sinking Funds 478NTMA expenses 9Issuance expenses 17
2,323
Non Exchequer Expenditure
CSRA 56
Analysis of Debt Service Outturn relative to Budget - EE Million
Agreed Budget adjusted for paymentfrom CSRA
2,678
Payment fromCSRA508
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The interest burden of the National Debt continued to fall in 2001. As represented by the ratio of interest
payments to tax revenue, the interest burden declined by an estimated 1 percentage point to 6.7 per
cent. This compares with almost 26.6 per cent in 1991, resulting in the freeing up of substantial financial
resources for other purposes.
The interest burden expressed relative to GNP declined further in 2001, falling to 2 per cent.
Debt Serv ice Costs
Interest as % of Tax Revenue
30
25
20
15
10
5
0
%
The interest series has been adjusted to reflect the cost of accrued interest on the National Savings Schemes.
Source: Department of Finance and NTMA
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
26.624.7
21.420.0 18.8 18.0
17.0
13.9
10.1
7.66.7
Interest as % of GNP
9.0
7.5
6.0
4.5
3.0
1.5
0
%
The interest series has been adjusted to reflect the cost of accrued interest on the National Savings Schemes.
Source: Department of Finance and NTMA
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
8.47.9
7.16.6
5.8 5.65.2
2.42.0
3.1
4.2
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INTEREST ACCRUING ON NATIONAL SAVINGS SCHEMES
In the 2001 Budget, the Minister for Finance continued to provide for full accrual of interest on the
National Savings Schemes – estimated at e406 million.
The Small Savings Reserve Fund was established in 1994 to address the growing interest overhang on
Savings Certificates, Savings Bonds and Instalment Savings. At end 2001, the reserve was e1,111
million, or 48 per cent of the estimated interest overhang of e2,303 million.
Debt Serv ice Costs
21
DEBT MANAGEMENT
The composition of the National Debt as at end 2001, together with comparative figures for 2000, is
shown below:
ee million (nominal)
31 December 2000 31 December 2001
Bonds denominated in euro 21,784 19,632
(quoted on Irish Stock Exchange)
of which:
Domestic holders 11,448 9,142
Non-resident holders 10,336 10,490
Other Medium Term Debt
Euro and foreign currency debt hedged into euro 4,940 3,784
Foreign currency debt 1,118 6,058 1,059 4,843
National Savings Schemes 5,308 5,140
Short Term Debt
Euro and foreign currency debt hedged into euro, net of cash deposits 2,373 5,555
Foreign currency debt, net of cash deposits 988 3,361 1,013 6,568
Total: 36,511 36,183
Euro denominated bonds outstanding decreased by e2.2 billion as bond redemptions were financed
through the issuance of short term paper. Other medium term debt declined by e1.3 billion, the latter
being the result both of debt maturities and of the early redemption of debt where opportunities arose
to buy back outstanding debt at competitive prices.
Debt Management
22
MATURITY PROFILE
At end 2001 euro denominated bonds outstanding had maturities ranging out to 2016 while most of the
medium and long term foreign currency and euro legacy currency debt will mature in the years 2002
and 2003.
The short term debt portfolio is made up of Exchequer Notes, Section 69 Notes and Commercial Paper, all
of which have a maximum maturity of twelve months.
The maturity profile of outstanding medium and long term debt as at year end is shown below:
Debt Management
Maturity Profile of Medium and Long Term Government Debt as at 31 December 2001
7
6
5
4
3
2
1
0
Ebn
Source: NTMA
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Euro Denominated Bonds
Euro Legacy and Foreign Currency Bonds
23
FUNDING ACTIVITY
All funding in 2001 was by way of short term borrowing to take advantage of the lower short term rates
which prevailed and continue to prevail in a relatively stable interest rate environment. Details of
funding activity, including short term debt issuance, are shown below:
ee million
(cash amounts)
Sale of euro denominated bonds 1 83
Sale (net) of short term paper 4,176
Sub-total 4,259
Less
Maturities of euro denominated bonds 2,189
Maturities and early redemption of euro legacy and foreign currency debt 1,219
Other domestic debt 22
Repayment (net) of National Savings 186
Sub-total 3,616
Net funding 643
The net funding of e643 million together with the Exchequer cash surplus of e588 million was used to
repay Nítrigin Éireann Teoranta debt of e241 million, to provide a temporary loan facility of e628 million
to the Housing Finance Agency and to increase cash balances by e362 million.
1 Excludes net purchases of Irish Government bonds by the NTMA’s secondary trading desk.
Debt Management
24
Debt Management
CURRENT LIQUID BOND ISSUES
The NTMA’s Primary Dealers are obliged to make continuous two-way prices during market hours in the
following three bonds:
Bond Maturity Amount Outstanding ee million(end June 2002)
4.25% Treasury Bond 2007 18 October 2007 5,199
5.00% Treasury Bond 2013 18 April 2013 6,249
4.60% Treasury Bond 2016 18 April 2016 3,636
These three benchmark bonds represent more than 75 per cent of the amount outstanding in euro
denominated bonds with more than one year to maturity.
Bond Switching Programme January 2002
In January 2002 the NTMA conducted its first major bond switch since the 1999 Securities Exchange
Programme. Two of the benchmark bonds (the 3.5% Treasury Bond 2005 and the 4% Treasury Bond 2010)
were by end 2001 "off the run" in terms of their remaining life compared with their euro zone peer group.
The objective was to create two new benchmark bonds which would have a good shelf life to provide new
funding and sufficient critical mass (e5 billion) to join the EuroMTS electronic trading system by mid
2002. The best way to achieve these strategic objectives was to offer investors switching terms out of
the 3.5% Treasury Bond 2005 and 4% Treasury Bond 2010 into two new "on the run" benchmark issues,
the 4.25% Treasury Bond 2007 and the 5% Treasury Bond 2013.
On 24 January 2002 the switch was successfully conducted via the Primary Dealers. Some 56 per cent of
the 2005 bond and 77 per cent of the 2010 bond were exchanged into the new 2007 and 2013 bonds
respectively on the day of the switch. After the formal switch the NTMA bought back some additional
amounts of the 2005 bond so that the total amount retired exceeded 60 per cent. Consequently, both
the 3.5% Treasury Bond 2005 and the 4% Treasury Bond 2010 have ceased to be benchmark bonds as
more than 60 per cent of the amount in issue has been retired.
25
PRIMARY DEALER SYSTEM
There are six Primary Dealers recognised by the NTMA, who make continuous two-way prices in designated
bonds in minimum specified amounts and within maximum specified spreads. There are also a number of
stockbrokers who match client orders. However, the Primary Dealers account for about 95 per cent of
turnover. The Primary Dealer system, which was introduced at the end of 1995, has brought improved depth
and liquidity to the market while the bond REPO market has grown in tandem, adding to overall liquidity.
The Primary Dealers are:
ABN AMRO, London
AIB Capital Markets, Dublin
Credit Agricole Indosuez, Paris
Davy Stockbrokers, Dublin
Deutsche Bank, Frankfurt
NCB Stockbrokers, Dublin
Primary Dealers are members of the Irish Stock Exchange on which the bonds are listed. With the switch
to electronic trading, two of the new benchmark bonds, the 4.25 per cent 2007 and the 5 per cent 2013
issues, have been listed on the EuroMTS platform, with effect from 25 June 2002. In addition, the
benchmark 4.6 per cent Treasury Bond 2016 has been listed on a new domestic MTS system.
The current dealer system has been augmented by two new institutions, Commerzbank and Schroder
Salomon Smith Barney, who are market makers in these bonds on EuroMTS. Unlike Primary Dealers, market
makers do not have access to bond auctions.
BOND MARKET DEVELOPMENTS
Euro area government bond yields were quite volatile over the course of 2001, reflecting changing market
sentiment regarding the outlook for the euro area and the wider global economy. Having traded at an average
of 4.8 per cent in the first quarter of the year, the German government 10 year bond – generally regarded as
the benchmark for sovereign issuance in the eurozone - reached a peak of 5.20 per cent in May, declined by
93 basis points to a low of 4.27 per cent in November and subsequently increased by 73 basis points to
finish the year at 5 per cent. The yields on Irish government 5, 10 and 16 year bonds since the beginning
of 2001 are shown in the graph overleaf. The 10 year bond was yielding 5.09 per cent at the beginning of
the year. During the year it traded in a range of 102 basis points from a high of 5.40 per cent in May to a
low of 4.38 per cent in November, closing the year at 5.33 per cent. The new 5 and 10 year benchmark bonds
Debt Management
26
were issued on 24 January 2002. Since that time the 10 year benchmark bond has traded in a range of
42 basis points from a low of 5.08 per cent on 5 February 2002 to a high of 5.50 per cent on 25 March.
During 2001 the Irish government 10 year bond tracked the yield changes on the German ten year benchmark
at an average spread of about 24 basis points. This spread tended to narrow over the course of the year,
apart from a temporary widening following 11 September, and ended the year at about 15 basis points as
compared with an average of 25 basis points in the first quarter of the year. The spread over German yields
for the bonds of the other smaller sovereign euro area issuers also declined over the course of the year.
While a number of factors, such as the greater homogeneity and integration of government bond markets
in the euro area, contributed to this narrowing of spreads, it is generally agreed that the most significant
factor at work in the process was the narrowing of interest rate swap spreads. The 10 year German
government benchmark bond traded at about 60 basis points under swaps at the beginning of the year;
by end year this spread had narrowed by some 34 basis points to a level of about 26 basis points.
Debt Management
Irish Government Bond Yields from 1 Jan 2001
6.0
5.5
5.0
4.5
4.0
3.5
Yield %
Source: Bloomberg
Jan-
01
Feb-
01
Mar
-01
Apr-
01
May
-01
Jun-
01
Jul-
01
Aug-
01
Sep-
01
Oct-
01
Nov-
01
Dec-
01
Jan-
02
Feb-
02
Mar
-02
Apr-
02
May
-02
Jun-
02
New benchmark bonds issued 24 Jan 2002.
3.5% Treasury Bond 2005
4% Treasury Bond 2010
4.6% Treasury Bond 2016
4.25% Treasury Bond 2007
5% Treasury Bond 2013
27
The narrowing of swap spreads is traditionally associated with a steepening of the yield curve, and can
result from an increased supply of government bonds or investors selling low yielding assets such as
government bonds in order to invest in higher yielding assets. All of those factors which favour the
narrowing of spreads were at work in 2001. The German government yield curve steepened considerably
last year as the yield spread between 2 year and 10 year bonds increased by 95 basis points in response
to the series of interest rate reductions by the ECB. The slowdown in the global economy introduced the
prospect of increased supply of government bonds as public finances generally deteriorated. The
relatively low yields on government bonds, particularly at the shorter maturities, encouraged investors
to seek higher returns either through investment in higher yielding assets or through the swap market
itself as receivers of fixed payments.
The tightening of government bond yield spreads within the euro area can be seen as a consequence of
a narrowing of the swap spread versus the German government bond. It can be expected that euro area
governments, given their creditworthiness, should trade under the swap rate.
Debt Management
Spreads to 10 Year German Government Bund – interpolated to Bundmaturity dates from 1 January 2001
45
40
35
30
25
20
15
10
Basis Points
Source: Bloomberg
Jan-
01
Feb-
01
Mar
-01
Apr-
01
May
-01
Jun-
01
Jul-
01
Aug-
01
Sep-
01
Oct-
01
Nov-
01
Dec-
01
Jan-
02
Feb-
02
Mar
-02
Apr-
02
May
-02
Jun-
02
Portugal
Belgium
Spain
Austria
Ireland
Finland
28
IRISH GOVERNMENT BOND ISSUANCE
In the declining interest rate environment, and given the limited funding requirement that then prevailed,
a decision was taken in early 2001 to fund exclusively from the short term market and to make arrangements
to enter the bond market in 2002 when yields were expected to be close to their lows in the current cycle
and a continuous issuance programme could be sustained. It was decided following a review to leave this
strategy unchanged despite the increased funding requirement which emerged later in the year.
A regular schedule of bond auctions was resumed in February 2002 following the successful completion
of the bond switch programme in January. The auctions, which are held on the third Thursday of each
month, are conducted through the Bloomberg Auction System. Normally some e600 million of either the
4.25% Treasury Bond 2007 or the 5% Treasury Bond 2013 is auctioned. In addition, for each auction
there is a non-competitive "auction" for 20 per cent of the amount sold in the competitive auction.
NON RESIDENT HOLDINGS
Non resident holdings of Irish government bonds have increased significantly since the introduction of
the euro. At end 1998, non-resident holdings amounted to e4.4 billion, or 21.8 per cent of the total
bonds outstanding. Since that time the non-resident participation in the market has increased steadily
and the amount held by non-residents at end 2001 stood at e10.5 billion, or 53.4 per cent of the total
bonds outstanding.
TURNOVER
Turnover in Irish government bonds in 2001 (excluding REPOs), as reported by the Irish Stock Exchange,
was e43.6 billion. This figure includes turnover of e9.1 billion by the Inter Dealer Broker (IDB). This
compares with e44.9 billion in 2000, including turnover of e8.2 billion by the IDB from 10 April to
31 December 2000 which was included in the annual figure published by the Irish Stock Exchange.
The 2001 figure represents a decline of some 6 per cent on the 2000 figure (excluding the IDB turnover
in both years) which is not unexpected given that there was no new issuance in 2001. Turnover in the
first quarter of 2002 was e16.7 billion (excluding the bond switch programme of 24 January 2002), or
27 per cent above the corresponding quarter of the preceding year.
Reported turnover figures are understated to the extent that intermediaries who are not members of the
Irish Stock Exchange, notably non-residents, dealt in Irish Government bonds via Euroclear and
Clearstream with counterparties who likewise are not members of the Irish Stock Exchange; such deals
would not be included as part of the turnover reported by the Irish Stock Exchange. Total REPO turnover
reported by the Exchange in 2001 amounted to e136.6 billion, a decrease of 22.9 per cent on the 2000
figure of e177.1 billion.
Debt Management
29
Debt Management
Bond and REPO Turnover 2001
25
20
15
10
5
0
Ebn
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: The Irish Stock Exchange
Bonds
REPOs
Bond Market* Turnover in 2001
e million
2.75% Treasury Bond 2002 1 7,246
3.5% Treasury Bond 2005 13,339
4% Treasury Bond 2010 17,021
4.6% Treasury Bond 2016 3,792
Total 41,398
Source: The Irish Stock Exchange
*Bonds for which Primary Dealers quote continuous prices
The above bonds represented 95 per cent of total Irish government bond market turnover in 2001.
Dealing spreads of 5 cent for short maturity bonds (out to 5 years) and 7 cent for medium maturity bonds
(6 to 10 years) were typical and the normal deal size in both maturity ranges was around e10 million.
Activity between Primary Dealers via the Inter Dealer Broker (IDB) - which enables Primary Dealers to
transact with each other on an anonymous basis – continued to contribute to the liquidity of the market.
1 The obligation of the Primary Dealers to quote two way prices for this bond ceased in April 2001 when its remaining life became less than 18 months.
30
SECONDARY TRADER
The NTMA maintains a secondary trading function to trade in its bonds with other market participants.
This is separated from primary bond desk activity by means of "Chinese Walls". The role of the secondary
trader is to provide liquidity to the market and to act as a source of market intelligence for the NTMA.
PRIMARY DEALERS’ ACTIVITIES
The shares of the Primary Dealers in the retail market in 2001 are shown below:
Debt Management
Primary Dealers’ Share of Turnover in 2001
NCB
ABN AMRO
AIB
Credit Agricole
Davy
Deutsche Bank
8.1%
23.5%
14.8%
25.2%
0.2%
28.2%
31
Debt Management
PRICE MAKING OBLIGATIONS OF PRIMARY DEALERS
Bond Maturity Minimum Size Maximum Spread
ee million ee cent
Over 18 months and under
6 years to maturity 4 15
6 years to 11 years to maturity 3 25
Over 11 years to maturity 2 35
CLEARING AND SETTLEMENT OF IRISH GOVERNMENT BONDS
In December 2000 the NTMA outsourced the clearing and settlement function for Irish government
bonds to Euroclear Bank, Brussels, from the Central Bank of Ireland. This arrangement allows
financial institutions to safekeep Irish government bonds and to settle domestic and cross-border
transactions in a single location. It increases the liquidity of the bonds in the international capital
markets by facilitating access for a broader range of investors. It meets the standards for real-time
delivery-versus-payment in relation to accounts at a central bank which the European Central Bank
has set as a requirement for settlement systems to be eligible for use in its monetary policy
operations from 1 January 2002.
The Central Bank of Ireland continues to act as Registrar for Irish government bonds. The total of all
holdings of Euroclear participants in each bond is recorded in an omnibus account on the Central Bank’s
register. Transactions between Euroclear participants are made within the Euroclear system without
affecting the Central Bank’s register while transactions between the local market and Euroclear
participants are notified between the Central Bank and Euroclear Bank.
32
MEDIUM TERM FOREIGN CURRENCY AND EURO LEGACY CURRENCY DEBT
Medium term foreign currency and euro legacy currency debt (excluding the National Savings Schemes)
amounted to e4,843 million at end 2001. Some e3,752 million, or 77 per cent, of this debt is scheduled
to mature over the two year period 2002 and 2003.
Euro legacy debt comprises outstanding debt contracted prior to 1999 and originally denominated in the
individual currencies of countries which are now members of the eurozone. Outstanding debt in non-euro
currencies such as the US dollar, Swiss franc and Japanese yen, but excluding liabilities in sterling, is
fully hedged into euro. The sterling medium term liabilities amounted to e919 million. In addition, there
was e1,187 million in short term sterling liabilities to give a total sterling liability of e2,106 million,
or 6 per cent of the National Debt.
BOND INDICES
Irish government bonds are included in the following international bond indices:
� Bloomberg / EFFAS – Government Bond Index
� JP Morgan – Irish Government Bond Index
� Lehman Brothers – Global Bond Index
� Merrill Lynch – Global Government Bond Index II
� Salomon Smith Barney – World Government Bond Index
SHORT TERM PAPER
The NTMA has a number of short term paper programmes which are used to source funds at attractive
rates for cash management purposes. Details of these programmes are outlined below:
Commercial Paper
The NTMA has a e2 billion Commercial Paper Programme, a US$7 billion multi-currency Euro Commercial
Paper Programme and a US Domestic $1 billion Commercial Paper Programme. The proceeds of any
drawdowns, which are hedged into euro if they are denominated in a foreign currency, are available for
liquidity management and for refinancing other more expensive forms of borrowing.
Debt Management
33
"Section 69" Notes
Section 69 Notes are tax-exempt securities, which
are issued in a range of currencies to eligible
foreign-owned companies located in Ireland. They
are sold directly by the NTMA and also through
designated banks in Ireland. These Notes are
flexible short term instruments producing cost-
effective funding for the Exchequer.
Exchequer Notes
Exchequer Notes in euro are sold to a range of
investors, including companies, banks and other
institutions. Available maturities range from one
day to one year with a minimum e250,000
investment. The NTMA makes two-way prices in
Exchequer Notes; these prices are shown on Reuters
and Bloomberg, page "NTMA".
AGRICULTURAL COMMODITYINTERVENTION BILLS
Agricultural Commodity Intervention Bills carry
similar terms to Exchequer Notes but are issued by
the NTMA on behalf of the Minister for Agriculture
and Food.
Debt Management
34
NATIONAL SAVINGS SCHEMES
There was a net outflow from the National Savings Schemes of e186 million in 2001 (2000 outflow: e237
million). At end year the total amount outstanding on the schemes was e5,140 million, representing a
decrease of 3.2 per cent on the equivalent 2000 figure.
The schemes accounted for some 14 per cent of the National Debt and this share has remained relatively
unchanged since 1996 as can be seen from the graph below:
With the lower rates now on offer, moneys are being repaid from all the schemes except the Post Office
Savings Bank (POSB) and Prize Bonds. The POSB grew by e110 million in 2001. A contributor to this has
been the new Special Savings Incentive Accounts which were introduced in May 2001. The net inflow of
funds to Prize Bonds in 2001 was e35 million.
The net outflow on the other schemes, namely Savings Certificates, Savings Bonds and Instalment
Savings was e331 million in 2001.
The savings schemes offer a unique mix of attractive characteristics, including:
- Government guarantee;
- no investment costs or commissions; and
- repayment flexibility.
The schemes, with the exception of Prize Bonds, are operated by An Post on behalf of the NTMA; Prize
Bonds are operated by The Prize Bond Company Limited, a joint venture between An Post and the Foreign
Exchange Company of Ireland (FEXCO).
National Savings Schemes
National Savings Schemes: Share of National Debt
50
40
30
20
10
0
Ebn
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
11% 11%11% 12% 13% 14% 14%
15%
14%
14% 14%
National Savings Schemes
35
The composition of the outstanding debt in the National Savings Schemes at end 2001 is shown below:
Details of the total amounts outstanding at end 2001 and of the net amounts raised or repaid in 2001
in each of the savings schemes are as follows:
Savings Schemes Total outstanding Money raised/repaid at end 2001 in 2001 (net)ee million ee million
Savings Certificates 2,491 -215
Savings Bonds 1,052 -111
National Instalment Savings 451 -5
Prize Bonds 332 35
Savings Stamps 2 0
Post Office Savings Bank (POSB) 812 110
Total 5,140 -186
In addition, an estimated e2,303 million was outstanding at end 2001 in accrued interest on Savings
Certificates, Savings Bonds and Instalment Savings (compared to e2,378 million at end 2000). A sum of
e9 million was paid out of the Small Savings Reserve Fund in 2001, bringing the total provision for
outstanding accrued interest to e1,111 million. This represents 48 per cent of the total accrued
interest outstanding.
National Savings Schemes
Composition of National Savings Schemes at end 2001
Savings Certificates
Savings Bonds
POSB
Instalment Savings
Prize Bonds
6%
48%
21%
16%
9%
36
National Savings Schemes
ADMINISTRATION COSTS
The total cost of administration for the schemes in 2001 was e35.1 million. A breakdown for each of the
schemes is set out below:
Savings Schemes ee million
Savings Certificates 4.4
Savings Bonds 2.1
Instalment Savings 2.6
Prize Bonds 5.0
Savings Stamps 1.0
Post Office Savings Bank 1 20.0
Total: 35.1
SAVINGS CERTIFICATES, SAVINGS BONDS AND INSTALMENT SAVINGS
The current rates of return on these investment products, which are free of Irish income tax, are set out
below:
� Savings Certificates: 16 per cent over a 51/2 year period, equivalent to an average annual rate of
return of 2.74 per cent if held to maturity. Minimum investment is e50 with a maximum of e80,000
for an individual and e160,000 for a joint holding.
� Savings Bonds: 8 per cent over 3 years, equivalent to an average annual rate of return of 2.6 per
cent if held to maturity. The minimum investment is e100 with a maximum of e80,000 for an
individual and e160,000 for a joint holding.
� Instalment Savings: 15 per cent after 5 years, equivalent to an average annual rate of interest of
2.57 per cent after allowance is made for the payment of the instalments over 12 months. The
minimum monthly investment is e25 with a maximum monthly investment limit of e500.
1 Fees relating to the Post Office Savings Bank (POSB) are paid from the POSB Fund.
37
National Savings Schemes
POST OFFICE SAVINGS BANK
The Post Office Savings Bank (POSB) grew by e110 million to e812 million by end 2001. The rate of
inflow was particularly marked in the last quarter of 2001 with a net inflow of e48 million, coinciding
with the euro changeover. This strong performance continued into 2002, with net inflows of over e105
million in the first half.
Most of the growth in the POSB came from the book-based demand deposit account. Deposit Account
Plus saw a net outflow of e6 million in 2001. There are tiered interest rates on both these accounts.
The rates which applied throughout 2001 are as follows:
Demand Account Rates per annum
Under e6,000 0.25%
e6,000 and over 0.50%
Demand Account Plus Rates per annum
Under e50,000 2.0%
e50,000 and over 2.5%
SPECIAL SAVINGS INCENTIVE ACCOUNTS
Two Special Savings Incentive Accounts (SSIAs) were launched in May 2001, giving customers the option
of a fixed or variable rate of return. An initial interest rate of 4% per annum was offered on both SSIA
products, with the variable rate product carrying a guarantee to remain within 1 per cent of the ECB main
refinancing rate. These SSIAs had attracted some e11 million by end 2001. At end June 2002, this had
risen to e36 million.
SSIAs offer an incentive to savers in the form of a Government bonus of 25 per cent which is added
monthly to the amount saved. To benefit from this bonus, an individual must keep his or her savings in
the account for the full five year period of the scheme. Interest is earned on the amount saved plus
bonus, and only this interest attracts tax at 23 per cent provided the SSIA is held for the full five years.
Early withdrawal will attract an exit tax of 23 per cent on the total amount withdrawn.
38
PRIZE BONDS
The rate of interest used to determine the prize fund is 2.75 per cent of the amount outstanding.
The current terms for Prize Bonds are:
� unit price of e6.25;
� minimum purchase price of e25 (or four units); and
� minimum prize of e75 and a monthly jackpot prize of e150,000.
Over 1,600 prizes are awarded each week.
National Savings Schemes
39
Credit Rat ings
CREDIT RATINGS
In October 2001, Standard & Poor's upgraded Ireland’s long term credit rating to AAA from AA+. In April
2001, the Japanese credit rating agency, Rating and Investment Information Inc., announced that it had
assigned new top grade ratings of AAA to Ireland's euro-denominated and foreign currency long term
debt and a-1+ to short term debt. Rating and Investment Information Inc. had previously rated only
individual Irish Government Samurai bonds, where the rating had been AA+.
Moody's and Fitch both reaffirmed the AAA rating for Ireland's long term debt. Likewise, Moody's,
Standard & Poor's and Fitch reaffirmed the top short term ratings. The details of the ratings are:
LONG TERM
Moody's: Aaa
Standard & Poor's: AAA
Fitch: AAA
Rating & Investment Information Inc.: AAA
SHORT TERM
Moody's: P-1
Standard & Poor's: A-1+
Fitch: F1+
Rating & Investment Information Inc.: a-1+
40
RISK
In managing the National Debt and certain fixed interest asset portfolios the NTMA has to deal with market
risk, liquidity risk, counterparty credit risk and operational risk. These are risks that cannot be eliminated; the
objective, therefore, is to control and manage them in accordance with the highest professional standards.
In the case of market risk, the NTMA has in place a number of risk management procedures in order to
quantify and manage, in a timely manner, the effects of movements in interest rates and, where
applicable, foreign exchange rates. The risk management tools include systems such as Value at Risk
(VAR) to quantify the sensitivity of budgeted debt service costs, both in the current year and in future
years, to movements in market rates; internal risk limits are used to contain these exposures.
Liquidity risks are associated with the need to have sufficient cash to meet all liabilities as they arise.
These are actively controlled. The NTMA manages liquidity by continuously updating cash flow forecasts
and by managing issuance dates and volumes.
Counterparty credit exposures arising from the placing of deposits, as well as transactions in derivatives,
are monitored and managed closely within approved limits. These exposures are measured on an
aggregate basis across the various portfolios.
Operational risk is controlled by rigorous policies and procedures governing payments and by the
separation of duties, in line with best domestic and international practice in the financial sector.
DEBT MANAGEMENT BENCHMARK
The Benchmark reflects the medium term debt management objectives of the Exchequer and represents the
optimal duration target, maturity profile and currency mix for the portfolio, consistent with written
guidelines set by the Minister for Finance. An annual assessment of the Benchmark is carried out by
independent advisers, UBS AG. In addition, revisions to the Benchmark are made from time to time (subject
to the Minister’s approval) to take account of significant changes in economic and financial circumstances.
This Benchmark performance measurement system takes account not just of current cash flows, but also
of the net present value of all future cash flows; in effect, it calculates the impact of the NTMA’s actions
not only in the year under review, but also their projected impact over the full life of the debt. This
measurement of performance against the Benchmark was carried out in 2001 by UBS AG, based on data
audited by PricewaterhouseCoopers.
The NTMA has developed risk management tools – incorporating both sensitivity and VAR – that measure
and forecast the sensitivity of performance relative to the Benchmark to possible future movements in
interest rates. Risk control limits are used to contain, within an acceptable range, the NTMA’s
performance exposure.
Risk and F inancia l Management
41
The NTMA follows best practice in having in place systems that allow detailed performance and risk
management information to be calculated daily and communicated electronically to the NTMA’s portfolio
managers and senior management.
NATIONAL PENSIONS RESERVE FUND – PASSIVE BOND PORTFOLIO
In June 2001, the NTMA was mandated by the National Pensions Reserve Fund Commission to manage
the passive bond portfolio of the Fund. The objective of this portfolio is to track the Merrill Lynch – Euro
Government Bond 5 year + index, excluding Ireland.
In 2001, a framework was established to provide for daily reporting of performance, tracking error and a
number of other standard risk statistics as provided for in the mandate.
FINANCIAL MANAGEMENT
Financial Management encompasses both Financial Control and Transaction Processing.
In the year 2001 the NTMA expanded from a debt management business to the management of four
distinct businesses, namely National Debt, National Pensions Reserve Fund, State Claims Agency and the
management of State funds such as the Social Insurance Fund. In addition, the NTMA successfully
commenced the provision of a Central Treasury Service to Local Authorities, Health Boards and Vocational
Educational Committees.
Strategic and detailed planning ensured that these new business areas became operational on schedule
without disruption to the NTMA’s comprehensive network of systems and controls. As these businesses
develop, further demands will be placed on the financial management unit to continue to underpin them.
In the area of financial management, the NTMA is at the leading edge of best international practice.
Maintaining and, where possible, improving its standards is a demanding task, but the benefits are
significant in terms of managing operational and systemic risk. Additionally, it also ensures that the
NTMA is well placed to cater for the changing environment as it relates to all its businesses, and to
handle new functions efficiently without undue increases in staff numbers and associated costs.
Due to the budget surplus in 2001 and the consequent low funding requirement, the volume of
transactions declined by 10 per cent to 22,500 in 2001 versus 2000. However, cashflows increased from
e295 billion to e300 billion. As the year 2001 was the last year in which dealing was conducted in euro
legacy currencies, there was significant effort in preparing the NTMA’s systems and procedures to cater
for euro conversion for customers who continued to use legacy currencies in the transition period since
1 January 1999. This was successfully completed on time for 1 January 2002 in line with the statutory
guidelines prescribed.
Risk and F inancia l Management
42
In accordance with statutory requirements the NTMA
continues to be audited by the Comptroller and
Auditor General. The annual internal audit for 2001
was conducted by PricewaterhouseCoopers.
Satisfactory reports were received in respect of both
audits. The NTMA was also certified as 100 per cent
compliant with the Prompt Payments of Accounts
Act 1997.
Risk and F inancia l Management
43
44
INFORMATION TECHNOLOGY
The I.T. department is responsible for developing,
installing and maintaining the NTMA’s information
technology systems. The task of providing new
systems has expanded greatly due to the
requirements of the new businesses, principally the
National Pensions Reserve Fund and the State Claims
Agency.
While the NTMA built its own debt management
systems, software packages have been purchased for
the new businesses. These packages have been
installed by the NTMA and the data needs are being
supported by the I.T. department. In addition to
catering to the needs of the new businesses, in
excess of ten major projects were completed. These
ranged from developing websites for the new
businesses to major enhancements of the existing
systems and the SWIFT messaging system.
Information Technology
45
LEGAL AND CORPORATE AFFAIRS
LEGAL
The NTMA’s in-house legal service provides advice in connection with
all of its functions including the negotiation of documentation for the
NTMA borrowing and derivatives transactions, its new Central Treasury
Service activities and other functions conferred by the National
Pensions Reserve Fund Act and the National Treasury Management
Agency (Amendment) Act, both of which were enacted in the year
2000.
During 2001 and into 2002, advice was provided to the National
Pensions Reserve Fund Commission on a wide range of legal issues
including public procurement and legislative and regulatory
matters, including guidance on the disclosure of interests in line
with the Ethics in Public Office Act. The legal service was also
responsible for all contractual matters including the negotiation of
the Fund's global custody, transition management and investment
management agreements.
The NTMA’s legal service also advises on legislative and regulatory
developments and provides day to day advice on contracts and
other legal matters. It is also responsible for ensuring compliance
with professional conduct rules in the areas of confidentiality,
conflicts of interest and other procedures associated with best
business practice.
PERSONNEL
The introduction of new businesses, in particular the National Pensions
Reserve Fund and the State Claims Agency, gave rise to the addition
of new staff with specialist knowledge appropriate to each of these
activities. The number of staff currently employed stands at seventy-
two.
It is the NTMA’s policy to protect the health and welfare of its staff
by maintaining a safe and healthy working environment in line with
its Safety Statement. During 2001 a new Staff Handbook reflecting
standards of best professional practice and changes in employment
law was put in place.
Legal and Corporate Affai rs
46
ULYSSES SECURITISATION P.L.C.
Ulysses Securitisation p.l.c. was established in 1995
for the purpose of securitising local authority
mortgage payments and is managed by the NTMA
under a Corporate Services Agreement.
To date a portfolio of mortgage payments has been
securitised through the issuance of bonds totalling
some e240 million.
Ulysses continued to operate successfully in 2001
and returned a net profit of e15.6 million.
The 2001 audited accounts of Ulysses have been
lodged with the Companies Office.
Ulysses Secur it i sat ion P.L .C .
47
National Pens ions Reserve Fund
NATIONAL PENSIONS RESERVE FUND
The National Pensions Reserve Fund was established under the National Pensions Reserve Fund Act 2000 to
meet as much as possible of the cost to the Exchequer of social welfare and public service pensions from
2025 to at least 2055. The Act provides that the National Pensions Reserve Fund Commission shall have
absolute discretion to control, manage and invest the assets of the Fund: the Commission is a body
corporate consisting of seven commissioners appointed by the Minister for Finance and includes, ex officio,
the Chief Executive of the NTMA. The Act requires that the Commission shall perform its functions through
the Manager of the Fund and that the Commission shall, on the establishment day provided for under the
Act, appoint the NTMA to be the Manager for a period of 10 years. Thereafter, the Commission may reappoint
the NTMA or such other person as it considers to be best qualified to be the Manager for a period of five
years. The NTMA was duly appointed as Manager on 2 April 2001.
The Act provides that, without prejudice to the responsibility of the Commission for the functions conferred
on it under the Act, the Commission may delegate to the Manager any of its functions as it considers
appropriate or expedient for the purpose of the Act. Under the Act the Commission is required to submit to
the Minister for Finance an annual report of its activities and the annual audited accounts of the Fund. The
report of the Commission is published separately and includes details of, inter alia, how the Commission
determined the Fund’s long term investment strategy. Neither the Commission nor the NTMA is involved in
stock selection. The following are the main functions delegated by the Commission to the NTMA as Manager:
� cash management, including the setting of banking counterparty limits;
� the opening of bank accounts;
� the keeping of the accounts of the Fund;
� the conduct of competitions for the appointment by the Commission of advisers on:
- the Fund’s long term investment strategy
- the selection of institutional investment managers
- the selection of a transition manager
- the selection of a global custodian;
� the conduct of competitions under the EU Public Procurement Directive for the appointment by the
NTMA of the following service providers, subject to their appointment being ratified by the
Commission:
- institutional investment managers
- transition manager
- global custodian;
48
� the making of payments covered by the operating budget adopted by the Commission under the Act;
� the rebalancing of the Fund’s investment portfolios in order to keep them within the parameters set
by the Commission in the context of its strategic benchmark for the Fund;
� the management of a passive bond portfolio;
� the management of the currency overlay hedging strategy adopted by the Commission;
� the conduct of a competition to select a best-execution monitoring service with respect to equity
transactions executed for the Fund by institutional investment managers;
� in order to ensure best execution, the monitoring of foreign exchange and bond transactions carried
out on behalf of the Fund;
� the measurement of investment performance in accordance with the Global Investment Performance
Standards (GIPS) methodology and the provision of appropriate performance attribution both for the
overall Fund level and individual investment portfolios; and
� the monitoring of risk for the Fund as a whole and for individual investment portfolios to ensure that
it is within the risk budgets established by the Commission.
As indicated above, the NTMA was given the responsibility of selecting, subject to ratification by the
Commission, the institutional investment managers, transition manager and global custodian. These
selection processes were conducted under the restricted tendering procedures provided for in the relevant
EU Public Procurement Directives. With respect to investment managers 581 expressions of interest in a
range of mandates were received from some 200 managers: of these 178 invitations to tender were sent
to some 100 managers. Fifteen external institutional investment managers were selected to manage
portfolios in accordance with the asset allocation decisions made by the Commission. Expressions of
interest in tendering for transition manager were received from 12 firms, all of whom were invited to
tender. Tenders were received from all 12 firms. Expressions of interest in tendering for global custodian
were received from 12 firms, 11 were invited to tender and 10 tenders were received. The names of all the
service providers appointed are contained in the Commission’s annual report.
The assets of the Fund were held in cash from 6 April 2001 to 31 December 2001, pending the selection
of investment managers. The NTMA’s management of the cash was measured against a short term
benchmark, agreed by the Commission, which consisted of an equal mix of 1, 3 and 6 months deposits at
Euribor minus 5 basis points, provided at least 75% of the investments matured before December 2001
and 100% matured before March 2002. In the period under review the Fund earned an interest return of
3.27% compared to the short term benchmark return of 3.24%. The Fund has, since year-end, moved to a
substantially invested position, in line with its chosen investment policy.
National Pens ions Reserve Fund
49
In order to discharge its functions as Manager of the
Fund, the NTMA has set up a small specialist unit,
recruiting the skills, where necessary, particularly in
the area of manager selection, performance
measurement and attribution and equity risk
management. The Fund’s asset management
functions devolved on the NTMA, namely, cash
management, currency overlay and passive bond
management are carried out at arm’s length and are
subject to risk monitoring arrangements external to
the unit with overall responsibility for the Fund.
National Pens ions Reserve Fund
50
SOCIAL INSURANCE FUND
All social insurance contributions are paid into the
above Fund, while payments in respect of items such
as unemployment and disability benefits, retirement
pensions and contributory old age pensions are made
out of it.
In July 2001 the NTMA commenced managing the
surplus in the Fund against a benchmark agreed
with the Minister for Finance. The yield achieved in
the Fund was 5.8 per cent while the benchmark yield
was 5.68 per cent. The balance grew steadily
throughout the year and amounted to e1.19 billion
at year end. The cash was invested in a combination
of bank deposits and euro sovereign bonds (with a
maximum tenor of 5 years) to gain an enhanced
return while at the same time ensuring adequate
liquidity to meet unforeseen needs.
Socia l Insurance Fund
51
CENTRAL TREASURY SERVICE
In early 2001 the NTMA commenced marketing the
Central Treasury Service to Local Authorities, Health
Boards and Vocational Education Committees. The
enabling legislation to provide this service was
enacted in December 2000.
Some 130 bodies are currently eligible to avail of
this service and the NTMA has been engaged
throughout the year on an extensive marketing
programme to inform the various bodies of the
benefits of the service. As at year end over 40
bodies have provided mandates to the NTMA, while
some e150 million in loan facilities, including short
term advances, have been negotiated to date. While
volumes on the deposit side are considerably lower,
a significant amount of deposit business has
nevertheless been transacted.
Centra l Treasury Serv ice
52
STATE CLAIMS AGENCY
Under the National Treasury Management Agency (Amendment) Act 2000, the management of personal
injury and property damage claims against the State and of the underlying risks was delegated to the
NTMA. When performing these functions, the NTMA is known as the State Claims Agency (SCA). The SCA
began operations on 3 December 2001 and, at that stage, over 700 existing claims were transferred to
it by State authorities. In general, these were claims which were either at an early stage in the litigation
process or were otherwise considered amenable to early resolution. In its first six months of operations,
an additional 500 new claims were submitted for management to the SCA.
CLAIMS UNDER MANAGEMENT
The SCA manages personal injury and property damage claims against certain State authorities, including
the State itself, Ministers, the Attorney General, the Commissioner of the Garda Síochána, prison
governors, community and comprehensive schools and various other bodies listed in the Schedule to the
Act.
The following classes of claim are expressly excluded from the SCA’s remit:
� Claims which give rise to Constitutional issues.
� Claims for compensation under the Garda Síochána (Compensation) Acts.
� Claims against the Minister for Justice, Equality and Law Reform, the Garda Commissioner or a prison
governor in respect of alleged assault by a member of the Garda Síochána or a prison officer.
� Claims under the non-statutory scheme providing compensation for personal injury criminally
inflicted on prison officers.
� Hearing-loss claims against the Minister for Defence or the Minister for Justice, Equality and Law
Reform.
� Claims arising from infection with Hepatitis C through the administration of blood or blood products.
� Child abuse claims against the State.
� Claims in which torts other than negligence are pleaded.
These classes of claim have been excluded either because alternative compensation arrangements have
already been put in place by the Government or because they give rise to issues of legal policy which
require the ongoing close involvement of the Attorney General.
State C la ims Agency
53
OBJECTIVES
The Act sets out two principal objectives for the SCA:
� To manage claims so as to ensure that the State’s liability and associated legal and other expenses
are contained at the lowest achievable level; and
� To provide risk advisory services to State authorities with the objective of reducing over time the
frequency and severity of claims.
CLAIMS MANAGEMENT
The claims management objective - that claims should be managed so as to minimise the State’s liability
– has the following practical implications:
� In cases where the State is considered liable or which involve an apportionment of liability as
between the State and the claimant, the SCA’s approach is to settle such claims expeditiously in so
far as it is possible to do so on reasonable terms.
� In cases where liability is disputed by the State, all necessary resources are applied to vigorously
defending such claims.
Under the Act, State authorities are obliged to report adverse incidents promptly to the SCA, to preserve
and furnish relevant evidence and to facilitate the SCA’s investigations. The SCA assumes ownership of
claims from the point at which it first receives notification of adverse incidents right through to final
resolution. Incidents are investigated in a thorough and timely fashion in order to facilitate early
decision-making in relation to liability and strategy. The SCA uses panels of service providers, such as
solicitors, medical consultants and engineers to provide expert advice on the State’s behalf. Each claim
is allocated a notional reserve and this is updated as new medical and other expert information becomes
available. The SCA then decides, in relation to each claim, whether it should be contested in the Courts
or whether settlement negotiations should begin.
RISK MANAGEMENT
The SCA’s risk management objective is to advise and assist State authorities on measures to be taken
to prevent the occurrence, or to reduce the incidence, of acts or omissions that may give rise to claims.
The risk management process includes the following:
� Identifying litigation risks with a particular attention to high risk activities and possible mass
action claims. The identification of risks will be conducted through analysis of claims data, reviews
of occupational risks, safety audits and site inspections.
State C la ims Agency
54
� Assessing the adequacy of measures already in place to counter such risks including the extent to
which each authority fulfils its common law and statutory duties.
� Providing risk advice and assistance, including training, so as to ensure that State authorities are
fully aware of the measures necessary to address any risks highlighted by their claims records and
by any risk evaluations or audits.
ACCOUNTABILITY
As with the NTMA’s other functions, the Chief Executive is accountable for the SCA to the Minister for
Finance and the Dáil’s Public Accounts Committee. In addition, the Act requires the SCA, inter alia, to
advise Ministers and other State authorities of the status and progress of claims made against them. The
SCA ensures that each State authority is fully informed about the state-of-play in relation to its claims,
including the projected costs of resolving them.
There is provision also in the Act for the Minister for Finance and the Attorney General to issue directions
and guidelines to the SCA in relation to the performance of its claims and risk management functions.
CLAIMS PORTFOLIO
Among the features of the claims portfolio as at end June 2002 are:
Personal Injuries – 94 per cent of claims
� 61 per cent of claims are brought by State employees. Of these, a third are by prison officers,
another third by civil servants, 22 per cent by members or ex-members of the Defence Forces and
12 per cent by members of the Garda Síochána.
� 33 per cent of claims are by members of the public.
Property Damage – 6 per cent of claims
� Property damage claims typically involve damage to third-party vehicles by State vehicles.
State C la ims Agency
Source: SCA
55
State C la ims Agency
Breakdown of Claims Portfolio by State Authority (end June 2002)
3%
6%
7%
21%
17%
14%
29%
3%
Prison Service
Garda
Defence Forces
Office of Public Works
Schools
Agriculture
Arts
Other
56
State C la ims Agency
Cause of Alleged Injury (end June 2002)
Miscellaneous
Asbestos
Road Traffic
Slips/trips/falls
35%
31%
17%
17%
CAUSE OF ALLEGED INJURY
The following is a breakdown of the claims portfolio by stated cause of alleged injury:
Source: SCA
Almost one-third of personal injury claims are from employees or ex-employees of the State who allege that
they were exposed to asbestos in the course of their employment. The basis for these claims is the so-called
‘worried well’ syndrome, i.e. alleged psychological trauma associated with potential rather than actual ill-health.
POLICY COMMITTEE
The Act provides for the establishment of a Policy Committee to advise the SCA on policy and procedures relating
to the performance of its claims management and risk management functions. The Committee, which consists
of seven members including the Chairman, was appointed by the Minister for Finance on 17 April 2002.
The members of the Committee are:
■ Dr. Noel Whelan (Chairman) – former Secretary of the Department of the Taoiseach, currently
Vice President of the University of Limerick.
■ Mr John F Dunne – Managing Director, J F Dunne Insurances.
■ Mr Michael Grace – Associate Director, AIB Investment Managers Limited.
■ Ms Anne Marie Hayes – Lead International Accountant, Apple Computers Limited.
■ Ms Margaret Lane – Claims and Insurance Manager, Bord Gáis.
■ Judge Frank Martin – former Judge of the Circuit Court.
■ Ms Anne Nolan – Principal Officer, Department of Finance.
The Committee met for the first time on 20 May 2002.
57
DORMANT ACCOUNTS
The Dormant Accounts Act 2001 provides that
balances on dormant accounts in certain financial
institutions be remitted to the State and used for
charitable purposes or purposes of societal or
community benefit. The balances in question will be
transferred not later than 30 April each year,
commencing 2003. The period for determining
dormancy is 15 years since the last customer-
initiated transaction. Notwithstanding that
accounts may be declared dormant, the Act
guarantees the right of account holders to reclaim
their moneys at any time.
The balances on dormant accounts, including
accrued interest, will be remitted to a new fund –
the Dormant Accounts Fund – which will be
managed by the NTMA. Moneys from the Intestate
Estates Fund Deposit Account may, on the direction
of the Minister for Finance, also be paid into the
Dormant Accounts Fund.
Disbursements from the Fund will be made on the
direction of the Dormant Accounts Disbursement
Board, established under the Act and consisting of
nine members who were appointed by the Minister
for Social, Community and Family Affairs on 5 June
2002. Pending disbursement, moneys in the Fund
will be invested by the NTMA in a range of
eligible assets.
Dormant Accounts
58
THE ASSET COVERED SECURITIES ACT 2001
The Asset Covered Securities Act 2001 provides that, in the event of any issuer of securities defaulting,
the NTMA must in the following order:
� Secure an alternative service provider to manage relevant asset pools; or
� Secure an alternative obligor for the relevant pools; or
� Manage the pools itself.
The Act further provides that the NTMA should have priority with respect to expenses incurred in the
performance of its functions and will derive fee income in return for accepting its functions under this Act.
The Asset Covered Secur it ies Act 2001
59
CONSULTANCY
The National Treasury Management Agency
(Amendment) Act 2000 empowered the NTMA to
provide consultancy services. The NTMA provides
advice and assistance to the Courts Service in
respect of arrangements being put in place to
manage funds under the control of the Courts.
At the request of the Minister for the Environment
and Local Government, the NTMA is chairing a
consultation group on greenhouse gas emissions
trading which is providing advice in that regard on
Ireland’s position with respect to the UN Framework
Convention on Climate Change and the
Kyoto Protocol.
Consultancy
1
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financial accountsstart page 60
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Financia l Statements
61
FINANCIAL STATEMENTS PREPARED BY THE NATIONAL TREASURY MANAGEMENTAGENCY IN ACCORDANCE WITH SECTION 12 OF THE NATIONAL TREASURYMANAGEMENT AGENCY ACT, 1990
1. National Debt of Ireland
2. National Treasury Management Agency - Administration Account
3. Post Office Savings Bank Fund
4. Capital Services Redemption Account
5. National Loans Advance Interest Account
6. National Loans (Winding Up) Account
7. National Treasury Management Agency (Unclaimed Dividends) Account
8. Deposit Monies Investment Account
9. Account of Stock Accepted in Payment of Inheritance Tax and Death Duties
10. Small Savings Reserve Fund
11. Prompt Payment of Accounts Act
National Debt of I re land
62
FINANCIAL STATEMENTS OF THE NATIONAL DEBT OF IRELANDFOR THE YEAR ENDED 31 December 2001
NATIONAL DEBT OF IRELAND
CONTENTS Pages
Statement of Agency's Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Report of the Comptroller and Auditor General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Service of Debt Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
National Debt Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Statement of Movement in National Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 - 78
Other NTMA Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 - 117
National Debt of I re land
63
STATEMENT OF AGENCY'S RESPONSIBILITIES
The Agency is required by the National Treasury Management Agency Act, 1990 to prepare financial
statements in respect of its operations for each financial year.
In preparing those statements, the Agency is required to:
� select suitable accounting policies and then apply them consistently;
� make judgements and estimates that are reasonable and prudent;
� prepare the financial statements on the going concern basis unless it is inappropriate;
� disclose and explain any material departure from applicable accounting standards.
The Agency is responsible for keeping in such form as may be approved by the Minister all proper and
usual accounts of all moneys received or expended by it and for maintaining accounting records which
disclose with reasonable accuracy at any time the financial position of the Agency, its funds and the
national debt.
The Agency is also responsible for safeguarding assets under its control and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
National Treasury Management Agency
64
REPORT OF THE COMPTROLLER AND AUDITOR GENERAL
I have audited the financial statements on pages 65 to 87 in accordance with Section 12 of the National
Treasury Management Agency Act 1990.
Respective Responsibilities of The Agency and of The Comptroller And Auditor General
The accounting responsibilities of the Agency are set out in the Statement of Agency's Responsibilities
on page 63. It is my responsibility, based on my audit, to form an independent opinion on the financial
statements presented to me by the Agency and to report on them.
Basis of Audit Opinion
In the exercise of my function as Comptroller and Auditor General, I conducted my audit of the financial
statements in accordance with auditing standards issued by the Auditing Practices Board and by
reference to the special considerations which attach to State bodies in relation to their management
and operation.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in
the financial statements. It also includes an assessment of the significant estimates and judgements
made in the preparation of the financial statements, and of whether the accounting policies are
appropriate, consistently applied and adequately disclosed.
I planned and performed my audit so as to obtain all the information and explanations that I considered
necessary to provide me with sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement whether caused by fraud or other irregularity or error. In
forming my opinion I also evaluated the overall adequacy of the presentation of information in the
financial statements.
Opinion
In my opinion, proper books of account have been kept by the Agency and the financial statements,
which are in agreement with them properly present the results of the Agency's operations for the year
ended 31 December 2001 and its balances at that date.
John Purcell
Comptroller and Auditor General
28 June 2002
National Debt of I re land
65
ACCOUNTING POLICIES
Background
The National Treasury Management Agency (NTMA) was established under the National Treasury
Management Agency Act, 1990 to perform the borrowing and National Debt Management function on
behalf of the Minister for Finance and other such functions as the Government may delegate to it.
The financial statements set out on pages 67 to 78 are for the National Debt of Ireland. The form of the
statements has been approved by the Minister for Finance under Section 12 of the National Treasury
Management Agency Act, 1990.
Basis of Accounting
The measurement base adopted is that of historical cost except where otherwise stated. Transactions are
recognised using the cash basis of accounting.
The National Debt Statement is a statement of the total amounts of principal borrowed by Ireland not
repaid at the end of the year, less liquid assets available for redemption of those liabilities at the same
date. The Minister for Finance under various statutes also guarantees borrowings by State and other
agencies. These guarantees are not included in these financial statements.
Reporting Period
The reporting period is for the year ended 31 December 2001.
Reporting Currency
The reporting currency is the euro, which is denoted by the symbol e.
Receipts and Payments
Receipts and payments relating to the National Debt through the Exchequer Account, Foreign Currency
Clearing Accounts and the Capital Services Redemption Account (CSRA) are recorded at the time the
money is received or payment made.
Liability Valuation
Debt balances are recorded at redeemable par value.
National Debt of I re land
66
DerivativesSwap agreements and other financial instruments are entered into for hedging purposes as part of the
process of managing the National Debt. The results of those hedging activities linked with specific
borrowing transactions are recognised in accordance with the underlying transactions. The net fund flows
arising on hedging activities not linked with specific borrowing transactions are included in debt service
costs at the time the funds are received or payment made. Where swaps are terminated and converted
into other swap instruments the fund flows impact upon debt service in accordance with the terms of
the revised instrument.
Foreign CurrenciesReceipts and payments in foreign currencies are translated into euro at the rates of exchange prevailing
at the date of the transaction. Liabilities and assets in foreign currencies are translated into euro at the
rates of exchange ruling at the year end dates.
National Debt of I re land
67
SERVICE OF DEBT STATEMENT Year ended 31 December 2001
2001 2000
Total Cost Total Cost
Notes e‘000 e‘000
Interest paid
Medium / Long Term Debt* 2 1,379,629 1,501,386
Short Term Debt** 3 117,724 177,589
National Savings Schemes 4, 9 403,012 440,190
Other Movements 5 68,934 95,497
Sinking Fund payments 6 478,017 480,437
Fees and Expenses 7 17,280 17,664
Expenses of NTMA 9,018 7,709
Interest received on deposits with
Central Bank and other banks (94,215) (145,405)
Total Service Cost ee 1 2,379,399 2,575,067
Total Service Cost IR£ 1,873,929 2,028,030
* Medium / Long Term Debt is Debt with an original maturity of more than one year
** Short Term Debt is Debt with an original maturity of not more than one year
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
The notes on pages 71 to 78 form part of these financial statements.
National Debt of I re land
68
NATIONAL DEBT STATEMENT 31 December 2001
2001 2000Notes emillion emillion
Medium / Long Term Debt *Irish Government Bonds listed on The Irish Stock Exchange 19,632 21,784Other Irish Government Public Bond Issues 2,056 2,759Private Placements 1,639 2,126European Investment Bank Loans 454 541Medium Term Notes 943 1,052Miscellaneous Debt (312) (345)
8 24,412 27,917
Short Term Debt **Commercial Paper 7,002 2,684Borrowings from Funds underthe control of the Minister 2,808 3,776for Finance 16 9,810 6,460
National Savings SchemesSavings Certificates 2,491 2,706Savings Bonds 1,052 1,163National Instalment Savings 451 456Savings Stamps 2 2Prize Bonds 332 297
9 4,328 4,624
38,550 39,001
Less Liquid Assets 10 (2,367) (2,490)
National Debt ee 12 36,183 36,511
National Debt IR£ 28,496 28,755
* Medium / Long Term Debt is Debt with an original maturity of more than one year
** Short Term Debt is Debt with an original maturity of not more than one year
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
The notes on pages 71 to 78 form part of these financial statements.
National Debt of I re land
69
NATIONAL DEBT CASH FLOW STATEMENT Year ended 31 December 2001
2001 2000e’000 e’000
Movement in Exchequer balances:Opening Balance in Exchequer Account (note 10) 1,433,870 1,593,596Commercial Deposits (note 10) 250,000 (250,000)Borrowing Activity (see below) (720,697) (3,087,181)
963,173 (1,743,585)Exchequer Surplus/(Deficit) 652,770 3,177,455
Closing Balance in Exchequer Account (note 10) 1,615,943 1,433,870
2001 2000Receipts Payments Net Nete’000 e’000 e’000 e’000
Borrowing ActivityIrish Government Bonds listed on The Irish Stock Exchange 5,389,053 (7,543,502) (2,154,449) (1,979,664)Other Irish Government Public Bond Issues 1,540 (746,888) (745,348) (914,984)Private Placements - (471,157) (471,157) (465,028)European Investment Bank Loans - (99,461) (99,461) (132,465)Medium Term Notes - (26,241) (26,241) (26,360)Miscellaneous Debt 1,022,477 (912,007) 110,470 86,509Borrowings from the Central Bank - - - (167,216)Commercial Paper 56,359,104 (52,423,153) 3,935,951 92,020Savings Certificates 227,802 (442,798) (214,996) (172,560)Savings Bonds 233,693 (344,554) (110,861) (124,329)National Instalment Savings 72,035 (76,533) (4,498) (6,025)Prize Bonds 72,795 (38,447) 34,348 27,188Borrowings from Ministerial Funds 26,520,053 (27,494,508) (974,455) 695,733
Total Borrowing Activity 89,898,552 (90,619,249) (720,697) (3,087,181)
Commercial Deposit Activity 37,212,726 (36,962,726) 250,000 (250,000)
Total Activity 2001 2000Receipts Payments Net Nete’000 e’000 e’000 e’000
Exchequer Account 116,346,002 (121,076,999) (4,730,997) (2,962,554)
Foreign Currency Clearing Accounts (Note 14) 10,765,276 (6,504,976) 4,260,300 (374,627)
127,111,278 (127,581,975) (470,697) (3,337,181)
Michael J Somers, Chief ExecutiveNational Treasury Management Agency
27 June 2002
The notes on pages 71 to 78 form part of these financial statements.
National Debt of I re land
70
STATEMENT of MOVEMENT in NATIONAL DEBT Year ended 31 December 2001
2001 2000
e’000 e’000
Opening National Debt 36,511,322 39,849,344
Increase / (Decrease) in National Debt (nominal) (328,559) (3,338,022)
Represented by:
Exchequer (Surplus)/Deficit (note 15) (652,770) (3,177,455)Effect of Foreign Exchange Rate Movements 13,161 (80,825)Bond Tranching: net reduction (excess) of proceeds over nominal liability 6,703 302,776Bond Cancellations: net reduction (excess) of cancellation costover nominal liability 7,927 (158,200)Movement in CSRA current balance (note 10) 55,680 (224,286)Nitrigen Eireann Teoranta Borrowings (note 15) 240,686 -Other nominal movements 54 (32)
(328,559) (3,338,022)
Closing National Debt ee 36,182,763 36,511,322
Closing National Debt IR£ 28,496,242 28,755,003
Michael J Somers, Chief ExecutiveNational Treasury Management Agency
27 June 2002
The notes on pages 71 to 78 form part of these financial statements.
National Debt of I re land
71
NOTES TO THE FINANCIAL STATEMENTS
1. Total Service CostTotal
Charged on Charged on Charged on ServiceForeign Currency Central Fund CSRA Cost 2001
Notes Clearing Accountse’000 e'000 e'000 e'000
Interest paidMedium / Long Term Debt 2 104,248 66,250 1,209,131 1,379,629Short Term Debt 3 24,527 67,304 25,893 117,724National Savings Schemes 4 - 43,219 359,793 403,012
Other Movements 5 4,129,862 (3,987,227) (73,701) 68,934
Sinking Fund payments 6 478,017 478,017
Fees and Expenses 7 1,287 15,980 13 17,280Expenses of NTMA 482 8,536 - 9,018
Interest received on deposits withCentral Bank and other banks (106) - (94,109) (94,215)
4,260,300 (3,785,938) 1,905,037 2,379,399Inter Account Movement - 1,849,357 (1,849,357) -
Net cash paid 4,260,300 (1,936,581) 55,680 2,379,399
National Debt of I re land
72
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2. Interest on Medium / Long Term DebtTotal TotalCost Cost
2001 2000e’000 e’000
Irish Government Bonds listed on The Irish Stock Exchange 923,033 1,009,777Other Irish Government Public Bond Issues 155,719 217,640Private Placements 144,743 150,528European Investment Bank Loans 37,232 47,607Medium Term Notes 46,500 50,626Miscellaneous Debt 72,402 24,688Borrowings from Central Bank - 520
1,379,629 1,501,386
3. Interest on Short Term DebtTotal TotalCost Cost
2001 2000e’000 e’000
Commercial Paper 101,641 157,439Borrowings from Funds under the control of the Minister for Finance 16,083 20,150
117,724 177,589
4. Interest on National Savings SchemesTotal TotalCost Cost
2001 2000e’000 e’000
Savings Certificates 231,487 188,618Savings Bonds 118,050 162,956National Instalments Savings 54,371 43,974Prizes in respect of Prize Bonds 8,361 7,569Small Savings Reserve (note 9) (9,257) 37,073
403,012 440,190
National Debt of I re land
73
NOTES TO THE FINANCIAL STATEMENTS (Continued)
5. Other MovementsThe NTMA, as part of its remit, engages in a range of debt management transactions including
derivatives. (See note 11) This figure reflects the net cashflows associated with these activities.
6. Sinking Fund PaymentsUnder Finance Act 1950 specified amounts were provided for the redemption of debt. The sums provided
and applied in 2001 were as follows:
Capital Services Redemption Account (Note 13) 478,017
478,017
7. Fees and ExpensesTotal Cost Total Cost
2001 2000
e’000 e’000
Expenses of Savings Certificates 4,376 4,235Expenses of Prize Bonds 4,975 4,873Expenses of Savings Bonds 2,105 2,316Expenses of National Instalment Savings 2,635 2,391Expenses of Savings Stamps 1,046 1,070Expenses of Foreign Loans 2,143 2,779
17,280 17,664
8. Medium / Long Term Debt
The maturity profile of the Medium / Long Term Debt, taking into account the treasury management
transactions entered into by the Agency, is as follows:-As at 31 As at 31
December December2001 2000
emillions emillions
Debt due for repayment within 1 year 4,850 3,453Debt due for repayment between 2 and 5 years 8,874 13,436Debt due for repayment in more than 5 years 10,688 11,028
24,412 27,917
National Debt of I re land
74
NOTES TO THE FINANCIAL STATEMENTS (Continued)
9. National Savings Schemes
Amounts shown in respect of Savings Certificates, National Instalment Savings, Savings Bonds and
Prize Bonds are net of e 10.6 million (2000: e 1.8 million) being cash balances held by An Post, TSB
Bank and the Prize Bond Company. An Post and the Prize Bond Company acts as the registrar for the
respective schemes.
As these financial statements are prepared on a cash basis the liabilities do not include the sum of
e 2,303 million (2000: e2,378 million), being the estimate of the amount of accrued interest at
31 December 2001 in respect of Savings Bonds, Savings Certificates and National Instalment Savings.
Section 160 of the Finance Act 1994 provided for the establishment of a fund to be known as the
Small Savings Reserve Fund. It provided for e 76 million to be paid into the fund in 1994 and in each
year thereafter for such sums, if any, as the Minister for Finance may decide. Where in any calendar
year interest payment on encashments of small savings exceed 11 per cent of total interest accrued
on such savings at the end of the immediately preceding calendar year, the resources of the fund may
be applied towards meeting so much of those interest payments which, as a percentage of the said
total interest accrued, exceed 11 per cent. The actual interest cost for 2001 was 16.98 per cent of
the interest accrued at the 31 December 2000 of e2,378 million. The Minister decided that e9 million
would be drawn down in 2001 from the fund to meet the excess over 11 per cent.
eemillions
Estimated accrued interest at 31 December 2001 2,303
Small Savings Reserve Fund
Balance at 1 January 2001 (1,120)
Amount applied during 2001 9
Balance at 31 December 2001 (Note 16) (1,111)
Estimated accrued interest not provided for at 31 December 2001 1,192
The balance in the Fund is transferred to the Exchequer as part of the borrowings from funds under
the control of the Minister for Finance.
National Debt of I re land
75
NOTES TO THE FINANCIAL STATEMENTS (Continued)
10. Liquid Assets
Opening balance Movements Closing balanceat 1 January during at 31 December
2001 2001 2001e'000 e'000 e'000
Exchequer Account 1,433,870 182,073 1,615,943Capital Services Redemption AccountCurrent Balance (note 13) 806,248 (55,680) 750,568Commercial Deposits* 250,000 (250,000) -
2,490,118 (123,607) 2,366,511
* These deposits were placed in compliance with ECB guidelines on liquidity management of Governmental balances held at the Central Bank of Ireland.
11. Derivatives
The Agency’s responsibility for both the issuance of new debt and the repayment of maturing debt,
together with the management of the interest rate and currency profile of the total debt portfolio,
makes the management of risk a central and critical element of the Agency’s business. The principal
categories of risk arising from the Agency’s activities are liquidity risk, market risk, counterparty
credit risk and operational risk. In all of these areas the Agency has comprehensive policies and
procedures to measure and control the risk involved.
A major requirement of the Agency is to ensure that future funding needs can readily be met at all
times. Ultimately the protection of liquidity is the Agency’s most critical task. Risks to the liquidity
of the National Debt can arise either from domestic events or, given the high level of linkage between
markets, from events outside Ireland. The Agency manages this risk primarily by controlling the
amount of liabilities maturing in any particular period of time. This is reinforced by the Agency's
activities in continuing to develop a well informed and diversified international investor base,
through maintaining its presence in all major capital markets and by extending the range of debt
instruments which it issues.
Market risk is the risk of a rise in debt service costs and in the total market value of the debt due to
changes in market interest or exchange rates. The Agency has to have regard to both medium and
short term objectives given its task of controlling not only near term fiscal debt service costs but
also the present value of all future payments of principal and interest. Fixed interest rate borrowings
are subject to a market valuation risk in the event of a decline in interest rates. While carrying less
market valuation risk than fixed rate debt, floating rate borrowings carry a higher risk to the near
term fiscal cost of servicing the debt. The balance between fixed and floating rate liabilities has to
National Debt of I re land
76
NOTES TO THE NOTES TO THE FINANCIAL STATEMENTS (Continued)
be managed for both the domestic and foreign currency portfolios. The exposure to interest rate and
currency risk is controlled through limiting the currency and interest rate concentration of the
portfolio. Specific quantitative limits are in place to control market risk; exposures against these
limits are reported regularly both to portfolio managers and to senior management. The Agency seeks
to achieve the best trade-off between cost and risk over time. As conditions in financial markets
change the appropriate interest rate and currency profile of the portfolio is reassessed.
Counterparty credit risk exposures arise from derivatives, deposits and foreign exchange transactions.
The level of credit risk is minimised by dealing only with counterparties of high credit standing.
Procedures provide for the approval of risk limits for all counterparties and exposures are reported
daily to management. A review of all limits is undertaken periodically to take account of changes in
the credit standing of counterparties or in economic and political events.
Comprehensive controls have been established to ensure that operational risks are managed in a
prudent manner. These controls include the segregation of duties between dealing, processing,
payments and reporting.
As part of its risk management strategy the Agency uses a combination of derivatives including
interest rate swaps, currency swaps and foreign exchange contracts. The following table shows the
nominal value of the instruments used and their present value.
31 December 2001 31 December 2000Nominal Present Value Nominal Present Valueemillion emillion emillion emillion
Interest Rate Swaps 3,324 (11) 3,349 19Currency Swaps & ForeignExchange Contracts 9,915 421 6,646 425
13,239 410 9,995 444
The Present Value of an instrument is determined by using an appropriate rate of interest to discount all
its future cashflows to their present value.
National Debt of I re land
77
NOTES TO THE FINANCIAL STATEMENTS (Continued)
12. National Debt
The currency composition of the National Debt, taking into account the treasury management
transactions entered into by the Agency, is as follows: -
As at 31 As at 31December December
2001 2000e millions e millions
Euro Basket Currencies* 34,110 34,405Sterling 2,106 2,114US Dollar (33) (7)Swiss Franc - (1)Japanese Yen - -
36,183 36,511
* This figure is net of liquid assets as at 31 December 2001 e 2,367 m (31 December 2000 e2,490m)
13. Capital Services Redemption Account
This account is used to record;
(a) payments of interest and principal out of an annual annuity designed to amortise borrowing for
voted capital under section 22 (7) of the Finance Act, 1950.
(b) certain receipts and payments arising out of debt servicing and debt management transactions
authorised by section 67(8) of the Finance Act, 1988 and section 54(7) of the Finance Act, 1970.
NOTES TO THE FINANCIAL STATEMENTS (Continued)14. Foreign Currency Clearing Accounts
e’000
Balance at 1 January 2001 NIL
Deposit interest received 106Amounts received under Finance Act 1988 [S67 (8)] 16,793,551Amounts paid under Finance Act 1970 [S54 (7)] (20,923,413) (4,129,862)
Foreign Currency Borrowing receipts 10,765,276Foreign Currency Borrowing payments (6,504,976) 4,260,300
Interest paid on Foreign Currency Borrowings (note 1)- Medium/ Long Term Debt (104,248)- Short Term Debt (24,527) (128,775)
Expenses of Foreign Currency Borrowings (note 1) (1,287)Expenses of NTMA (482)
Balance at 31 December 2001 NIL
15. Nítrigen Éireann Teoranta Borrowings
In implementation of the provisions of Nítrigin Éireann Teoranta Act, 2001 the Minister for Finance
took over the debt in 2001 which increased the National Debt by e241 million. The Minister for
Finance delegated to the Agency the function of discharging the borrowings. The Agency discharged
the borrowings during 2001.
16. Borrowings from Funds under the control of the Minister for Finance
These funds are short term borrowings of the Exchequer drawn down as a "ways and means" of funding
Exchequer requirements from a number of funds under the control of the Minister for Finance.
As at 31 As at 31December December
2001 2000e millions e millions
Post Office Savings Bank Fund 26 510Small Savings Reserve Fund 1,111 1,120Ulysses Securitisation plc 220 209Deposit Monies Investment Account 1,451 1,937
2,808 3,776
National Debt of I re land
78
79
Administrat ion Account for the Year ended 31 December 2001
80 80
CONTENTS
Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Income and Expenditure Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 - 87
National Treasury Management Agency
81
ACCOUNTING POLICIESBackground
The National Treasury Management Agency was established under the National Treasury Management
Agency Act 1990 to perform the borrowing and National Debt management function on behalf of the
Minister for Finance and other such functions as the Government may delegate to it.
Information relating to the National Debt of Ireland is contained on pages 63 to 78. Financial
information covering the Agency itself is set out on pages 81 to 87.
Under Section 11 of the National Treasury Management Agency Act 1990 " the expenses incurred by the
Agency in the performance of its functions shall be charged on and paid out of the Central Fund
(Exchequer) or the growing produce thereof".
Reporting Currency
The reporting currency is the euro, which is denoted by the symbol e.
Basis of Accounting
The financial statements have been prepared on an accruals basis under the historical cost convention.
The form of the financial statements has been approved by the Minister for Finance under Section 12 of
the National Treasury Management Agency Act 1990.
Fixed Assets and Depreciation
Fixed assets are stated at cost less accumulated depreciation. Fixed assets are depreciated by annual
instalments over their estimated useful lives.
Leasing
Rentals under the operating lease are charged to the income and expenditure account on an accruals basis.
Software
Computer software costs are charged to the income and expenditure account in the period in which they
are incurred.
Capital Account
The capital account represents receipts from the Central Fund which have been allocated for the purchase
of fixed assets. The receipts are amortised in line with depreciation on the related fixed assets.
National Treasury Management Agency
82
INCOME AND EXPENDITURE ACCOUNT Year ended 31 December 2001Notes 2001 2000
e e
Income
Central Fund 8 9,472,852 7,874,272
Other income 118,093 147,730
Transfer (to)\from capital account 5 144,153 (30,088)
9,735,098 7,991,914
Expenditure 1 (9,735,098) (7,991,914)
Net income/(expenditure) NIL NIL
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
The notes on pages 84 to 87 form part of these financial statements.
National Treasury Management Agency
83
BALANCE SHEET 31 December 2001
Notes 2001 2000 e e
Fixed AssetsFixed assets 2 1,119,461 1,249,620
Financial Assets 7 32,859 46,853
Current AssetsCash at bank and in hand 54,535 32,558Debtors 3 1,313,765 723,677
Total Current Assets 1,368,300 756,235
Current LiabilitiesCreditors 4 1,368,300 756,235
Current Assets less Current Liabilities - -
Total Assets less Current Liabilities 1,152,320 1,296,473
Representing:Capital account 5 1,152,320 1,296,473
1,152,320 1,296,473
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
The notes on pages 84 to 87 form part of these financial statements.
National Treasury Management Agency
84
NOTES TO THE FINANCIAL STATEMENTS1. Expenditure
Year Ended Year Ended31 December 2001 31 December 2000
E E
Salaries and superannuation 5,773,026 4,595,000Establishment expenses 731,023 476,909Operating expenses 2,769,334 2,483,906Depreciation 453,858 428,242Amortisation 7,857 7,857
Total expenses 9,735,098 7,991,914
2. Fixed AssetsFurniture,
Equipment &Property Motor Vehicles Total
E E E
Cost:Opening balance at 1 January 2001 1,216,038 2,668,411 3,884,449Additions at cost - 341,699 341,699Disposals - (270,919) (270,919)
Balance at 31 December 2001 1,216,038 2,739,191 3,955,229
Accumulated depreciation:
Opening balance at 1 January 2001 601,923 2,032,906 2,634,829Depreciation for the period 60,802 393,056 453,858Disposals - (252,919) (252,919)
Balance at 31 December 2001 662,725 2,173,043 2,835,768
Net book value at 31 December 2001 553,313 566,148 1,119,461
Net book valueat 31 December 2000 614,115 635,505 1,249,620
The estimated useful lives of fixed assets by reference to which depreciation is calculated is as follows: Property 20 yearsEquipment & Motor Vehicles 2 to 5 yearsFurniture 10 years
The property is leased under a long-term lease, which is subject to rent reviews. The current annual rentis e382,593, however this is expected to increase substantially due to the finalisation of negotiations ofthe rent review.
National Treasury Management Agency
85
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3. Debtors 2001 2000E E
Central Fund 893,111 438,288Prepayments 367,169 257,912Other debtors 53,485 27,477
1,313,765 723,677
4. Creditors 2001 2000E E
Creditors 46,575 6,251Accruals 1,321,725 749,984
1,368,300 756,235
5. Capital Account 2001 2000E E
Opening balance 1,296,473 1,266,385Transfer from /(to) Income and Expenditure AccountAsset Funding - Fixed Assets 341,699- Financial Assets repayment (note 7) (6,137) 335,562
Amortisation of capital funding- Amortisation in line with depreciation (453,858)- Net amount released on asset disposal (18,000)- Amortisation of Financial Assets (7,857) (479,715) (144,153) 30,088
Closing balance 1,152,320 1,296,473
6. Superannuation
Superannuation entitlements of staff are conferred under a defined benefits superannuation scheme set up
under Section 8 of the National Treasury Management Agency Act 1990. Those of the Chief Executive are
provided under his contract of service. Contributions, including those of staff who have opted for dependant
benefit arrangements, are transferred to an externally managed fund. The Agency contribution is determined
on the advice of an independent actuary and is, at present, set at a level of 25% of payroll. Contributions by
the Agency for the year ended 31 December 2001 amounted to e803,267 (2000: e628,920).
Liabilities arising under the scheme are provided for under the above arrangements, except for entitlements
arising in respect of the service of certain members of NTMA staff recruited from other areas of the public
sector. On 7 April 1997 the Minister for Finance designated the National Treasury Management Agency as an
approved organisation for the purposes of the Public Sector (Transfer of Service) Scheme. This designation
provides for, inter alia, contributions to be made, as and when benefits fall due for payment in the normal
course, in respect of former civil servants employed by the Agency. No provision has been made for funding
the payment of such entitlements.
National Treasury Management Agency
86
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FRS 17
An actuarial valuation of the company’s defined benefit pension plan was carried out at 31 December2001 by a qualified independent actuary. The major assumptions used by the actuary were:
At 31/12/2001
Rate of increase in salaries 5.0%Rate of increase in pensions in payment 2.5% or 4.0% as appropriateDiscount rate 6.0%Inflation assumption 2.5%
The assets in the scheme and the expected rate of return were:
Long-term rate of return Value at Expected at 31/12/2001 31/12/2001
E000s
Equities 8.5% 9,728Bonds 5.5% 1,609Property 7.0% 1,072Other 5.0% 357
Total market value of assets 12,766Present value of accrued scheme liabilities (13,493)
Surplus / (Deficit) (727)Related deferred tax credit (0)
Net pension liability (727)
7. Financial Assets
The Agency joined TARGET during 1999, which is a real time settlement system administered by IRISLtd. The system is used to settle euro transactions through the European System of Central Banks.As a condition of membership, the Agency was required to pay e63,487, which was apportioned asfollows:
� 20 ordinary IR£1 (E1.27) shares purchased at par
� E24,178.82 as a loan repayable over the period commencing on 30 September 1999 and ending
on 30 September 2003
� E39,282.70 as a non-repayable, irrevocable and unconditional capital contribution to the
company. This will be amortised over 5 years.
National Treasury Management Agency
87
NOTES TO THE FINANCIAL STATEMENTS (Continued)
The position at 31 December 2001 was: E
Opening balance 46,853Amortisation (7,857)Loan repayment received (6,137)
Closing balance 32,859
8. Central Fund Income
This is an accrual figure whereas the expenses of NTMA which appear on the Service of Debt Statementis cash drawn from the Central Fund. These figures are reconciled as follows:
2001 2000E E
Central Fund Income per Service of Debt Statement 9,018,029 7,709,317Movement in Central Fund Debtors (note 3) 454,823 164,955Income from Central Fund per Income and Expenditure Account 9,472,852 7,874,272
9. Expenses of NTMA as Manager
The costs incurred by the NTMA as Manager to the National Pensions Reserve Fund amounted toe1.94 million. These costs are included in the Income and Expenditure account.
88
Post Off ice Savings Bank Fund
89
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2001
CONTENTS Pages
Report of the Comptroller and Auditor General.................................................................. 90
Accounting Policies ...................................................................................................... 91
Income and Expenditure Account.................................................................................... 92
Balance Sheet.............................................................................................................. 93
Notes to the Financial Statements .......................................................................... 94 - 96
Post Off ice Savings Bank Fund
90
REPORT OF THE COMPTROLLER AND AUDITOR GENERAL
I have examined in accordance with auditing standards the financial statements set out in pages
91 to 96 which are in the form approved by the Minister for Finance.
I have obtained all the information and explanations which I considered necessary for the purpose
of my audit.
In my opinion proper books of account have been kept by the National Treasury Management Agency
in respect of the Fund and the financial statements, which are in agreement with them, give a true
and fair view of the state of affairs of the Fund at 31 December 2001 and of its transactions for the
year then ended.
John Purcell
Comptroller and Auditor General
28 June 2002
Post Off ice Savings Bank Fund
91
ACCOUNTING POLICIES
Background
The Minister for Finance guarantees the repayment and servicing of moneys invested by depositors in the
Post Office Savings Bank. An Post remits the net proceeds of such investment to the Agency. The Post
Office Savings Bank Fund does not form part of the Exchequer. The fund has the following main purposes:-
- to invest the moneys made available by depositors, and
- to act as an intermediary through which the tranching, cancellation, sale and repurchase (repo)
transactions and secondary market trading can be transacted by the Agency, and
- to provide moneys under Central Treasury Services to designated state bodies.
The significant accounting policies adopted by the fund are as follows:-
Reporting Currency
The reporting currency is the euro, which is denoted by the symbol e.
Basis of Accounting
The financial statements are prepared on an accruals basis under the historical cost convention.
Investments
Investments are stated at cost.
Post Off ice Savings Bank Fund
92
INCOME AND EXPENDITURE ACCOUNT Year ended 31 December 2001
2001 2000
Notes e e
Investment income 1 23,621,529 17,072,758
Interest paid and payable 2 3,463,666 3,249,843
Other expenses 3 20,023,220 18,205,317
23,486,886 21,455,160
134,643 (4,382,402)
Balance at beginning of year 8,859,845 13,242,247
Balance at end of year 8,994,488 8,859,845
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
The notes on pages 94 to 96 form part of these financial statements.
Post Off ice Savings Bank Fund
93
BALANCE SHEET 31 December 2001
2001 2000
Notes e e
AssetsAdvances 4 25,703,265 509,814,093Investments in Bonds 5 109,083,374 153,725,844Debtors 7 18,764,427 5,776,500Agricultural Commodity Intervention Bills - 6,000,000Central Treasury Loans 26,951,450 -Commercial Paper 10 627,829,190 -Cash 14,375,708 24,975,425
822,707,414 700,291,862
Liabilities
POSB Deposits 8 812,195,996 684,405,822Creditors 9 1,516,930 7,026,195Accumulated Reserves 8,994,488 8,859,845
822,707,414 700,291,862
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
The notes on pages 94 to 96 form part of these financial statements.
Post Off ice Savings Bank Fund
94
NOTES TO THE FINANCIAL STATEMENTS1. Investment Income 2001 2000
e e
Interest received and receivable 21,654,405 17,499,448Profit/(Loss) on sale of investments 1,967,124 (426,690)
23,621,529 17,072,758
2. Interest Paid and Payable 2001 2000e e
Interest paid and credited to depositors of POSB 3,463,666 3,249,843
3,463,666 3,249,843
3. Other Expenses 2001 2000e e
Management expenses 20,023,220 18,205,317
20,023,220 18,205,317
The management expenses are paid to An Post in respect of its administration of the Post OfficeSavings Bank.
4. Advances
Advances represent Ways and Means funds, which have been loaned to the Exchequer.
5. Investments Bonds 2001 2000e e
At cost 109,083,374 153,725,844
At market value 110,011,052 157,705,105
Post Off ice Savings Bank Fund
95
NOTES TO THE FINANCIAL STATEMENTS (Continued)
5. Investments (Continued)
Schedule of Investment Holdings:-
Nominal Stock CostIR£ e
10,394,123 2.75% Treasury Bond, 2002 10,343,139357,332 9.25% Capital Stock, 2003 389,364145,802 8.25% Exchequer Bond, 2003 162,315
24,270,832 3.5% Treasury Bond, 2005 23,806,09251,829 12.5% Capital Stock, 2005 68,005
216,252 14.75% Development Stock, 2002 - 04 245,931652,187 9% Capital Stock, 2006 780,534856,631 6% Treasury Bond, 2008 916,768315,608 8.25% Capital Stock, 2008 377,289
62,384,810 4% Treasury Bond, 2010 59,060,029402,433 8.5% Capital Stock, 2010 497,970188,252 8.75% Capital Stock, 2012 241,608654,322 8.25% Treasury Bond, 2015 838,893
12,000,000 4.6% Treasury Bond, 2016 11,355,437
112,890,413 109,083,374
NOTES TO THE FINANCIAL STATEMENTS (Continued)
6. Sale and Repurchase Agreements
Sale and Repurchase agreements are transacted between the Post Office Savings Bank Fund and
primary dealers in the bond market. The related income or interest cost arising from these
transactions is reflected in investment income in the Income and Expenditure account.
7. Debtors
2001 2000e e
Dividends and interest receivable 4,495,724 3,553,282
Other debtors 14,268,703 2,223,218
18,764,427 5,776,500
8. POSB Deposits 2001 2000
e e
Deposits from Post Office Savings Bank 812,195,996 684,405,822
812,195,996 684,405,822
9. Creditors 2001 2000
e e
Net funds due under Sale and Repurchase Agreements 1,119,362 -
Other creditors 397,568 7,026,195
1,516,930 7,026,195
10.Commercial Paper
2001 2000
e e
HFA Commercial Paper 627,829,190 -
627,829,190 -
The Post Office Savings Bank Fund purchased short term commercial paper issued by the Housing
Finance Agency (HFA) of Ireland as an investment.
Post Off ice Savings Bank Fund
96
Capita l Serv ices Redemption Account
97
Capital Services Redemption Account
Report of the Comptroller and Auditor General
I have examined the account on pages 98 to 100. I have obtained all the information and explanations
that I have required.
In my opinion the account, which is in agreement with the accounting records maintained by the
National Treasury Management Agency in respect of this activity, properly reflects transactions for the
year ended 31 December 2001 and the balance at that date.
John Purcell
Comptroller and Auditor General
28 June 2002
Capita l Serv ices Redemption Account
98
CAPITAL SERVICES REDEMPTION ACCOUNT
(Finance Act, 1950 Section 22 (No 18 of 1950 as amended))
Account of Receipts and Payments Year ended31 December 2001
e
Balance at 1 January 2001 806,247,682
ReceiptsAmounts received from Central Fund
under Finance Act 1950, Section 22 as amended:-
- Interest 1,371,339,751
- Sinking Fund 478,017,314 1,849,357,065
Amounts received under Finance Act 1988 [S 67 (8)] 553,977,779
Other amounts received under specific borrowing transactions 12,512,172
Deposit interest received 94,108,960
Other interest received 62,123
3,316,265,781
Payments
Amounts applied in the redemption of National Debt:-
Irish Government Bonds Listed on Irish Stock Exchange 439,659,554Other Irish Government Public Bond Issues 20,131,940Small Savings 18,225,820 478,017,314
Amounts applied in meeting interest on National Debt (note 2) 1,607,403,692
Amounts applied in respect of liabilities under Finance Act 1970, [S 54 (7)] 480,276,477
Balance at 31 December 2001 750,568,298
3,316,265,781
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
Capita l Serv ices Redemption Account
99
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL SERVICES REDEMPTION ACCOUNT
(Finance Act, 1950 Section 22 (No 18 of 1950 as amended))
1. This account was established under Section 22 of the Finance Act 1950. Annuities are paid into it
from current revenue charged on the Central Fund. A fixed amount may be used for servicing (interest
payments) of the public debt. The balance must be used for principal repayments. Each years Finance
Act makes an annuity provision which specifies a maximum amount to be used for interest payment,
however as the 2001 capital programme was funded from the current budget surplus, no provision
was made in the 2001 Finance Act to make a payment into the CSRA. In addition, under the Finance
Act 1988 receipts from transactions of a normal banking nature, e.g. forward exchange deals, swaps
and interest on deposits, for which a foreign currency clearing account has not been established
under Section 139 of the Finance Act 1993, must be received into the Capital Services Redemption
Account and may be used towards defraying interest and expenses on the public debt and towards
the making of payments and repayments in respect of such transactions.
Capita l Serv ices Redemption Account
100
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2. Amounts applied in meeting interest on National Debt:-
Year ended
31 December 2001e
6.5% Treasury Bond, 2001 133,599,7528% Capital Loan, 2001 1,771,2789% Government Bond, 2001 10,097,0742.75% Treasury Bond, 2002 83,359,3948.25% Exchequer Bond, 2003 836,1199.25% Capital Stock, 2003 18,530,13014.75% Development Stock, 2002 - 04 3,768,7066.25% Treasury Bond, 2004 15,123,3473.5% Treasury Bond, 2005 189,261,06312.5% Capital Stock, 2005 1,875,2108% Treasury Bond, 2006 9,336,7879% Capital Stock, 2006 12,196,7818.25% Capital Stock, 2008 170,4866% Treasury Bond, 2008 4,223,1844% Treasury Bond, 2010 261,673,4198.5% Capital Stock, 2010 1,260,7978.75% Capital Stock, 2012 3,574,5358.25% Treasury Bond, 2015 912,8114.6% Treasury Bond, 2016 168,152,653Other Irish Government Public Bond Issues 67,872,345Small Savings 359,792,982Cash Mgmt Borrowings 7,422,606Other Euro Borrowings 22,282,563European Investment Bank 1,100,000Private Placements 74,501,324Swap Driven Issues 154,695,564Expenses 12,782
1,607,403,692
National Loans Interest Account
101
Report of the Comptroller and Auditor General
I have examined the account on page 102. I have obtained all the information and explanations that
I have required.
In my opinion the account, which is in agreement with the accounting records maintained by the
National Treasury Management Agency in respect of this activity, properly reflects transactions for the
year ended 31 December 2001 and the balance at that date.
John Purcell
Comptroller and Auditor General
28 June 2002
National Loans Advance Interest Account
102
Account of Receipts and Payments Year ended31 December 2001
e
Balance at 1 January 2001 2,567,386
Accrued interest received on National Loans
- Tranches and Auctions 5,200,899
- Cancellations 3,459 5,204,358
Accrued interest paid on National Loans (7,673,970)
Balance at 31 December 2001
- Cash with Central Bank of Ireland 97,774
Note to the Account
The Agency from time to time issues or cancels amounts of existing Irish Government Bonds. This is
effected by means of sales or purchases by the Post Office Savings Bank Fund, which in turn settles
with the Exchequer. The accrued interest element of the settlement amount for each bond transaction
takes into account the fact that a full dividend is payable to the registered owner in cases where
bonds are held on an ex-dividend date. The purpose of this account is for the Post Office Savings
Bank Fund to compensate the Exchequer for the unearned element of the dividend arising on
tranching bonds cum-dividend or on cancelling bonds ex-dividend. These amounts are then used to
offset the related servicing costs of the Exchequer.
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
National Loans (Winding Up) Account
103
REPORT OF THE COMPTROLLER AND AUDITOR GENERAL
I have examined the account on pages 104 and 105. I have obtained all the information and explanations
that I have required.
In my opinion the account, which is in agreement with the accounting records maintained by the
National Treasury Management Agency in respect of this activity, properly reflects the transactions for
the year ended 31 December 2001 and the balance at that date.
John Purcell
Comptroller and Auditor General
28 June 2002
National Loans (Winding Up) Account
104
ACCOUNTS OF RECEIPTS AND PAYMENTS Year ended 31 December 2001
Note e
Balance at 1 January 2001 10,568,980
Amount provided to meet late redemption claims 1 19,466,983
Receipts from Paying Agents 11,110
Payments for redemption of National Loans 2 (21,812,955)
Balance at 31 December 2001
– Cash with Central Bank of Ireland - 8,234,118
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
National Loans (Winding Up) Account
105
Notes to the Account
1. When a National Loan is due for redemption, the full amount outstanding is payable to loan holders. Any
amount not claimed at the end of the quarter in which redemption occurs is transferred into this account
by a payment from the Exchequer. This account also includes balances, which were held by the Central Bank
and the Department of Finance as Paying Agents, in respect of uncashed redemption payments, and were
transferred to the National Treasury Management Agency. Any further claims are met from this account.
2. National Loans redeemed during the year ended 31 December 2001 e
4.5% National Loan 1973-78 3819% Conversion Stock 1980-82 6,09513% Conversion Stock 1984 2597.5% National Loan 1981-86 2,16614% National Loan 1985-90 3,0475.75% National Loan 1982-87 2549.75% National Loan 1984-89 4,5815.75% Exchequer Stock 1984-89 7,4036% Exchequer Loan 1985-90 6,4776.75% National Loan 1986-91 1,8797% National Loan 1987-92 3,5157.5% Development Stock 1988-93 1,7789.25% National Loan 1989-94 4,0689.5% Conversion Bond 1995 1,45112% Conversion Stock 1995 4,1909% Capital Loan 1996 14,8749.25% Exchequer Loan 1991-96 3,5577.75% Capital Stock 1997 24,9239.75% Nat Development Loan 1992-97 3,1789.75% Capital Stock 1998 28,35211% National Loan 1993-98 2,7516.25% Treasury Bond 1999 163,8597.5% Capital Stock 1999 78,94311.5% Development Loan 1997-99 6,6978% Treasury Bond 2000 606,03611.75% Capital Stock 2000 26,74714.5% Finance Loan 1998-00 8,61913% finance Stock 1997-02 4,15012.25% Development Stock 2000-03 37,6776.5% Exchequer Stock 2000-05 2,220,3446.5% Treasury Bond 2001 15,011,7519% Government Bond 2001 1,849,8638% Capital Loan 2001 1,673,090
Total 21,812,955
National Treasury Management Agency (unclaimed dividends) Account
106
REPORT OF THE COMPTROLLER AND AUDITOR GENERAL
I have examined the account on page 107. I have obtained all the information and explanations that
I have required.
In my opinion the account, which is in agreement with the accounting records maintained by the
National Treasury Management Agency in respect of this activity, properly reflects the transactions for
the year ended 31 December 2001 and the balance at that date.
John Purcell
Comptroller and Auditor General
28 June 2002
National Treasury Management Agency (unclaimed dividends) Account
107
ACCOUNTS OF RECEIPTS AND PAYMENTS Year ended 31 December 2001
Note e
Balance at 1 January 2001 1,443,539
Receipt of unclaimed dividends 14,248
Payment of unclaimed dividends 2 (13,503)
Balance at 31 December 2001
– Cash with Central Bank of Ireland 1 1,444,284
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
Notes to the Account
1. When a dividend is due on a Loan liability, the full amount due is paid by the National Treasury
Management Agency to the Paying Agent and then issued to the registered holders. The balance on
this account represents dividends on matured loans, which have not been claimed by the registered
holders and have been returned to the National Treasury Management Agency by the Paying Agent.
The balance is available to cover future claims on these dividends. The Paying Agent maintains a cash
float, on behalf of the National Treasury Management Agency, which it uses to service claims as they
arise during the year.
2. Unclaimed Dividends paid in year e
Irish Government Bonds registered with Central Bank of Ireland 12,512
Foreign Bonds administered by Commerzbank AG 991
13,503
National Treasury Management Agency (unclaimed dividends) Account
108
Deposit Monies Investment Account
109
REPORT OF THE COMPTROLLER AND AUDITOR GENERAL
I have examined the account on page 110. I have obtained all the information and explanations that
I have required.
In my opinion the account, which is in agreement with the accounting records maintained by the
National Treasury Management Agency in respect of this activity, properly reflects transactions for the
year ended 31 December 2001 and the balance at that date.
John Purcell
Comptroller and Auditor General
28 June 2002
Deposit Monies Investment Account
110
ACCOUNTS OF RECEIPTS AND PAYMENTS Year ended 31 December 2001
e
Balance at 1 January 2001 1,936,561,000
Ways and Means Advances paid to Exchequer 19,262,188,000
Ways and Means Advances repaid by Exchequer (19,747,884,000)
Balance at 31 December 2001
- Ways and Means Advances to Exchequer 1,450,865,000
Note to the Account
This account records the borrowings and repayments of surplus funds held in the Supply Account
of the Paymaster General.
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
Account of Stock Accepted in Payment of Inheritance Tax and Death Duties
111
REPORT OF THE COMPTROLLER AND AUDITOR GENERAL
I have examined the account on pages 112 and 113. I have obtained all the information and explanations
that I have required.
In my opinion the account, which is in agreement with the accounting records maintained by the
National Treasury Management Agency in respect of this activity, properly reflects transactions for the
year ended 31 December 2001 and the balance at that date.
John Purcell
Comptroller and Auditor General
28 June 2002
Account of Stock Accepted in Payment of Inheritance Tax and Death Duties
112
ACCOUNTS OF RECEIPTS AND PAYMENTS Year ended 31 December 2001
e
Balance at 1 January 2001 93,605
Receipts
Interest received on stock holdings NIL
Proceeds of stock redemption 21,286
Payments
Paid to Revenue Commissioners for value of
stock transferred to the Minister for Finance
– Nominal (48,747)
– Interest NIL
Balance at 31 December 2001 (27,461)
66,144
Stock Account
Balance at 1 January 2001 NIL
Movement for the year
Nominal amount of stock transferred to
the Minister for Finance 21,286
Nominal amount of stock redeemed (21,286)
NIL
Balance at 31 December 2001 NIL
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
Account of Stock Accepted in Payment of Inheritance Tax and Death Duties
113
Notes to the Account
1. Purpose of the Account
This account established under the Finance Act 1954, amended by the Capital Acquisitions Tax Act
1976, is a vehicle for the handling of certain designated Irish Government Bonds which are accepted
by the Revenue Commissioners at face value in lieu of death duties. The Irish Government Bonds are
received by the Revenue Commissioners and transferred to the Minister for Finance. They are then
cancelled and the proceeds (at market value) taken into the account. Any shortfall between this and
the liability to the Revenue Commissioners (at face value) is made up by the Exchequer and the
Revenue Commissioners are paid in full.
2. Stock Account
The Stock Account records transactions at nominal par value. Any balance on this account consists
of bonds held by the Minister for Finance but not yet sold by the Minister to discharge a tax liability
to the Revenue Commissioners.
Account of the Smal l Savings Reserve Fund
114
REPORT OF THE COMPTROLLER AND AUDITOR GENERAL
I have examined the account on page 115. I have obtained all the information and explanations that
I have required.
In my opinion the account, which is in agreement with the accounting records maintained by the
National Treasury Management Agency in respect of this activity, properly reflects transactions for the
year ended 31 December 2001 and the balance at that date.
John Purcell
Comptroller and Auditor General
28 June 2002
Account of the Smal l Savings Reserve Fund
115
ACCOUNTS OF RECEIPTS AND PAYMENTS Year ended 31 December 2001
e
Balance at 1 January 2001 1,120,487,340
Received (paid) from (to) Exchequer (9,257,122)
Balance at 31 December 2001 1,111,230,218
Estimated accrued interest at 31 December 2001 2,302,555,994
Section 160 of the Finance Act 1994 provided for the establishment of a fund to be known as the Small
Savings Reserve Fund. It provided for e76.18 million to be paid into the fund in 1994 and in each year
thereafter for such sums, if any, as the Minister for Finance may decide. Where in any calendar year
interest payment on encashments of small savings exceed 11 per cent of total interest accrued on such
savings at the end of the immediately preceding calendar year, the resources of the fund may be applied
towards meeting so much of those interest payments which, as a percentage of the said total interest
accrued, exceed 11 per cent. The actual interest cost for 2001 was 16.98 per cent of the interest accrued
at the 31 December 2000 of e2,378 million.
The balance in the Fund is transferred to the Exchequer as repayable ways and means advances.
No interest was paid by the Exchequer on such funds advanced.
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
Prompt Payment of Accounts Act 1997
116
REPORT OF THE COMPTROLLER AND AUDITOR GENERAL PURSUANT TO SECTION 13 OFTHE PROMPT PAYMENT OF ACCOUNTS ACT, 1997
Responsibilities of The Agency and of The Comptroller and Auditor General
The Agency is obliged to comply with the Act and, in particular, is required
� to pay suppliers by the appropriate payment date
� if payment to a supplier is late, include the appropriate penalty interest with the payment together
with the information required by Section 6
� disclose its payment practices in the period in the appropriate way.
Under Section 13 of the Act, it is my responsibility, as auditor of the National Treasury Management
Agency, to report on whether, in all material respects, the Agency has complied with the provisions of
the Act.
Basis of OpinionMy examination included a review of the payment systems and procedures in place and checking, on a
test basis, evidence relating to the operation of the Act by the Agency during the year.
I obtained all the information and explanations which I considered necessary for the exercise of my
function under Section 13 of the Act.
OpinionAs the result of my examination, it is my opinion that the Agency complied in all material respects with
the provisions of the Act during the year ended 31 December 2001.
John Purcell
Comptroller and Auditor General
28 June 2002
Statement of Compliance - Prompt Payment of Account Act 1997
117
The National Treasury Management Agency (NTMA) undertakes to comply with the Prompt Payment of
Accounts Act 1997. In accordance with the Act and guidelines issued by the Department of Enterprise,
Trade and Employment, the following information is provided.
Procedures established to ensure compliance with the Act
The NTMA have procedures in place to ensure that all invoices received are paid within the time limits
specified on the invoices or the statutory time limit if no period is specified. While the procedures are
designed to ensure compliance with the Act they can only provide reasonable and not absolute assurance
against material non-compliance with the Act. These procedures operated in the financial period under
review. There were no late payments and therefore no interest was paid.
In accordance with the Prompt Payments of Accounts Act 1997, the following information is provided for
the financial period ending 31 December 2001.
(a) Payment Practices
The NTMA makes payments to suppliers in accordance with the terms stated on invoices or terms
specified in individual contracts if appropriate. The standard terms are 30 days.
(b) Late payments in excess of ee317
Number of Invoices Average Period of Delay
Nil n\a
(c) Overall percentage of late payments of total payments and total interest paid
The overall percentage of late payments to total payments was 0%.
The total amount of interest paid with respect to late payments was NIL
Michael J Somers, Chief Executive
National Treasury Management Agency
27 June 2002
Notes
118
Notes
119
Notes
120